nep-geo New Economics Papers
on Economic Geography
Issue of 2016‒12‒04
six papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. The Global Diffusion of Ideas By Ezra Oberfield; Francisco Buera
  2. The Production Function for Housing: Evidence from France By Combes, Pierre-Philippe; Duranton, Gilles; Gobillon, Laurent
  3. Does federal contracting spur development? Federal contracts, income, output, and jobs in US cities By Gerritse, Michiel; Rodríguez-Pose, Andrés
  4. The Effect of State Taxes on the Geographical Location of Top Earners: Evidence from Star Scientists By daniel wilson; enrico moretti
  5. Gaining and losing EU Objective 1 funds: Regional development in Britain and the prospect of Brexit By Marco Di Cataldo
  6. Guidelines for public administrations on location privacy: European Union Location Framework By Leda Bargiotti; Inge Gielis; Bram Verdegem; Pieter Breyne; Francesco Pignatelli; Paul Smits; Ray Boguslawski

  1. By: Ezra Oberfield (Princeton University); Francisco Buera (Federal Reserve Bank of Chicago)
    Abstract: We provide a tractable theory of innovation and technology diffusion to explore the role of international trade in the process of development. We model innovation and diffusion as a process involving the combination of new ideas with insights from other industries or countries. We provide conditions under which each country’s equilibrium frontier of knowledge converges to a Frechet distribution, and derive a system of differ- ential equations describing the evolution of the scale parameters of these distributions, i.e., countries’ stocks of knowledge. In particular, the growth of a country’s stock of knowledge depends only on its trade shares and the stocks of knowledge of its trading partners. We use the framework to quantify the contribution of bilateral trade costs to cross-sectional TFP differences, long-run changes in TFP, and individual post-war growth miracles.
    Date: 2016
  2. By: Combes, Pierre-Philippe; Duranton, Gilles; Gobillon, Laurent
    Abstract: We propose a new non-parametric approach to estimate the production function for housing. Our estimation treats output as a latent variable and relies on the first-order condition for profit maximisation with respect to non-land inputs by competitive house builders. For parcels of a given size, we compute housing by summing across the marginal products of non-land inputs. Differences in non-land inputs are caused by differences in land prices that reflect differences in the demand for housing across locations. We implement our methodology on newly-built single-family homes in France. We find that the production function for housing is reasonably well, though not perfectly, approximated by a Cobb-Douglas function and close to constant returns. After correcting for differences in user costs between land and non-land inputs and taking care of some estimation concerns, we estimate an elasticity of housing production with respect to non-land inputs of about 0.80.
    Keywords: Housing; Production function
    JEL: R14 R31 R32
    Date: 2016–11
  3. By: Gerritse, Michiel; Rodríguez-Pose, Andrés
    Abstract: Government contracts are frequently courted by firms and governments alike as a solution to generate more jobs, income, and economic growth. However, the development impact of government contracts remains controversial. This paper uses georeferenced data on United States (US) federal contracts, distinguishing between the location of the recipient and the location of performance, for the years 2005-2014 in order to assess the extent to which federal government contracting has contributed to job and wealth generation and economic growth in metropolitan areas of the US. The results of the analysis show that individuals living in cities with a higher share of contract spending per capita witnessed improvements in employment. Aggregate GDP per capita also rose in cities hosting the companies receiving the contracts. However, the effects - once reverse causality and spurious trends are controlled for using a fine-scale fixed effect strategy and instrumentation - are very small, raising reasonable questions about the viability of federal contracting as a vehicle for economic development.
    Keywords: Economic Growth; federal contracting; government spending; jobs; urban development; wages
    JEL: O23 R11 R38 R58
    Date: 2016–11
  4. By: daniel wilson (Federal Reserve Bank); enrico moretti
    Abstract: We quantify how sensitive is migration by star scientist to changes in personal and business tax differentials across states. We uncover large, stable, and precisely estimated effects of personal and corporate taxes on star scientists’ migration patterns. The long run elasticity of mobility relative to taxes is 1.8 for personal income taxes, 1.9 for state corporate income tax and -1.7 for the investment tax credit. While there are many other factors that drive when innovative individual and innovative companies decide to locate, there are enough firms and workers on the margin that state taxes matter
    Date: 2016
  5. By: Marco Di Cataldo
    Abstract: Leaving the European Union will entail for UK regions losing access to the EU Cohesion Policy. Have EU funds been effective in the country, and what may be the consequences of an interruption of EU financial support to the UK’s poorer regions? This paper studies the impact of ‘Objective 1’ funding – the highest form of EU aid – in Cornwall and South Yorkshire, two of the UK’s most subsidised regions. We employ synthetic control, matching and difference-in-differences methodologies in order to assess the labour market and economic performance of the two regions. The results indicate that Cornwall and South Yorkshire performed better than counterfactual comparisons throughout the period in which they were classified as Objective 1. Unlike Cornwall, South Yorkshire lost Objective 1 eligibility in 2006 and this massively reduced its share of EU funds. Our findings indicate that, after 2006, South Yorkshire was unable to sustain the gains obtained in previous years. This suggests that while Structural Funds may be effectively improving socio-economic conditions of poorer regions, the performance of subsidised areas could be deeply affected by a reduction (or worse, an interruption) of EU aid.
    Keywords: EU Cohesion Policy, Objective 1, Brexit, synthetic control method, UK
    JEL: R11 O18 J60
    Date: 2016–11
  6. By: Leda Bargiotti (European Commission – DG DIGIT); Inge Gielis; Bram Verdegem; Pieter Breyne; Francesco Pignatelli (European Commission - JRC); Paul Smits (European Commission - JRC); Ray Boguslawski (European Commission - JRC)
    Abstract: Public administrations increasingly use location data to deliver public services such as location-enabled tools, apps for tourists, toll collection services or cadastral web applications. Location data such as addresses, GPS coordinates or camera images is key to many public services and can also be linked to all sorts of other data, generating new information that was not available before. Despite the increase consumption of location data, its potential to reveal personal information is often underestimated, especially in comparison to other sensitive data, for instance in the financial and health domains. Location data not only says where an individual is, it also says who he/she is and what his/her interests and preferences are. Therefore, location data privacy is of paramount importance for public administrations dealing with location data. While location data privacy has many aspects in common with general data protection principles, it also has unique characteristics that require specific guidance. The goal of this guideline is therefore twofold: to outline the key obligations that public administrations should comply with when handling personal location data and raising awareness about the importance of location data privacy, highlighting key implications and risks associated with the processing of location data. It does so by guiding the reader through concrete scenarios that public administrations might face when processing personal location data and provides a set of effective and practical recommendations that can help ensuring the adequate protection of personal location data.
    Keywords: Location data privacy, data protection, guidelines
    Date: 2016–11

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