nep-geo New Economics Papers
on Economic Geography
Issue of 2016‒12‒18
eleven papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Does It Pay to Live in Big(ger) Cities?: The Role of Agglomeration Benefits, Local Amenities, and Costs of Living By Rudiger Ahrend; Alexander C. Lembcke
  2. The Production Function for Housing: Evidence from France By Pierre-Philippe Combes; Gilles Duranton; Laurent Gobillon
  3. Spatial Labour Market Matching By Elzbieta Antczak; Ewa Galecka-Burdziak; Robert Pater
  4. Density economies and transport geography: Evidence from the container shipping industry By Xu, Hangtian; Itoh, Hidekazu
  5. Microgeography of innovation in the city: Location patterns of innovative firms in Berlin By Rammer, Christian; Kinne, Jan; Blind, Knut
  6. Geographical clustering and the effectiveness of public innovation programs By Crass, Dirk; Rammer, Christian; Aschhoff, Birgit
  7. Interregional Migration, Human Capital Externalities and Unemployment Dynamics: Evidence from Italian Provinces By Roberto Basile; Alessandro Girardi; Marianna Mantuano; Giuseppe Russo
  8. Regional determinants of exit across firms' size: evidence from a developing country By Calá, Carla Daniela; Manjón-Antolín, Miguel; Arauzo-Carod, Josep-Maria
  9. Agglomeration and (the Lack of) Competition By Yao Amber Li; Joseph Kaboski; Wyatt Brooks
  10. High-Skilled Migration and Agglomeration By Sari Pekkala Kerr; William Kerr; Çaǧlar Özden; Christopher Parsons
  11. What drives employment growth and social inclusion in EU regions By Marco Di Cataldo; Andrés Rodríguez-Pose

  1. By: Rudiger Ahrend; Alexander C. Lembcke
    Abstract: This study approaches the question whether it “pays” to live in big(ger) cities in a three-fold manner: first, it estimates how city size affects worker productivity (agglomeration benefits) in Germany, based on individual-level wage data. Second, it considers whether productivity benefits translate into real gains for workers by taking local price levels into account. Third, it examines the role of amenities in explaining differences in real benefits across cities. The estimated elasticity for agglomeration benefits is around 0.02, implying that comparable workers in Hamburg (3 million residents) are about 6% more productive than in Recklinghausen (150 000). But agglomeration benefits are, on average, offset by higher prices, i.e. city size does not systematically translate into real pecuniary benefits for workers. Amenities, e.g. seaside access, theatres, universities, or “disamenities”, e.g. air pollution, explain – to a large degree – variation in real pecuniary benefits, i.e. real wages are higher in low-amenity cities.
    Keywords: agglomeration benefits, agglomeration costs, cities, cost of living, Functional Urban Areas, local amenities
    JEL: J31 R23 R12
    Date: 2016–12–15
  2. By: Pierre-Philippe Combes (Univ Lyon, CNRS, GATE L-SE UMR 5824, F-69131 Ecully, France ; Sciences Po, Economics Department, 28, Rue des SaintsPères, 75007 Paris, France); Gilles Duranton (Wharton School, University of Pennsylvania, 3620 Locust Walk, Philadelphia, pa 19104, usa); Laurent Gobillon (PSE-CNRS, 48 Boulevard Jourdan, 75014 Paris, France)
    Abstract: We propose a new nonparametric approach to estimate the production function for housing. Our estimation treats output as a latent variable and relies on the firstorder condition for profit maximisation with respect to nonland inputs by competitive house builders. For parcels of a given size, we compute housing by summing across the marginal products of nonland inputs. Differences in nonland inputs are caused by differences in land prices that reflect differences in the demand for housing across locations. We implement our methodology on newlybuilt singlefamily homes in France. We find that the production function for housing is reasonably well, though not perfectly, approximated by a CobbDouglas function and close to constant returns. After correcting for differences in user costs between land and nonland inputs and taking care of some estimation concerns, we estimate an elasticity of housing production with respect to nonland inputs of about 0.80.
    Keywords: housing, production function
    JEL: R14 R31 R32
    Date: 2016
  3. By: Elzbieta Antczak; Ewa Galecka-Burdziak; Robert Pater
    Abstract: We analyse the extent to which spatial interactions affect the labour market matching process. We apply spatial econometrics methods, including spatial panel Durbin models, which are rarely used in labour market matching analysis. We use the data on stocks and inflows of unemployed individuals and vacancies registered at public employment offices in Poland. We conduct the analysis at the NUTS-3 and NUTS-4 levels in Poland for the period 2003-2014. We find that (1) spatial interactions affect the matching processes in the labour market; (2) workers commute long distances, and many of these commutes involve crossing only one administrative border; (3) spatial indirect, direct, and total spillover effects determine the scale of outflows from unemployment in the focal and adjacent areas; and (4) spatial modelling is a more appropriate approach than classical modelling for the matching function.
    Keywords: spatial interaction; spillover effect; matching function; region;
    JEL: C23 J61 J64
    Date: 2016–11
  4. By: Xu, Hangtian; Itoh, Hidekazu
    Abstract: By exploiting the 1995 Hanshin earthquake, which occurred in Japan, as an exogenous shock to the container shipping industry of northeastern Asia, this study provides an empirical relevance of the role of transport density economies in shaping the transport geography. The Hanshin earthquake caused severe damage to the Kobe port. Consequently, its container throughput was largely diverted to the nearby Busan port, which scaled up in this windfall. Focusing on the long-term growth of major port areas in northeastern Asia, we find that extensive diversions of container traffic occurred after the earthquake from Tokyo and Yokohama ports to Busan port, although container shipping operations in Tokyo and Yokohama ports were not directly affected by the earthquake. We interpret the economies of transport density benefitting Busan as the underlying mechanism; increased transport density allows Busan port to further enlarge its hinterlands and reshape the transport geography. We also find that the unintended diversions of container shipping lead to a structural change of manufacturing pattern in related regions.
    Keywords: hub port; density economies; transport geography; earthquake
    JEL: F1 L0 R4
    Date: 2016–12–14
  5. By: Rammer, Christian; Kinne, Jan; Blind, Knut
    Abstract: This paper investigates the micro-location pattern of innovative and non-innovative firms in Berlin using detailed information on the firms' addresses and their local environment. The study employs a unique, representative panel data set of Berlin-based firms from manufacturing and services covering a five-year period (2011-2015) and applying the standard concepts and measurement approaches used in the Community Innovation Surveys. While controlling for firm size, age and sector, we find product innovators and R&D performing firms located closer to research infrastructures, start-ups and other firms from the same industry. They tend to prefer more dynamic neighbourhoods and avoid very densely populated areas. For process innovators, no significant differences from non-process innovators are found. Firms are more likely to introduce new-to-market innovations if other firms in their direct neighbourhood had introduced such innovations in the previous period, but also if firms with such innovations have moved out of their neighbourhood. The 'creative environment' of a firm in terms of bars, cafes, clubs, leisure facilities or cultural locations does not seem to be linked to the innovative activity of firms.
    Keywords: Microgeography,Innovation,Location Decision,Berlin,Knowledge Spillovers
    JEL: O31 O32 O33 R12 R39
    Date: 2016
  6. By: Crass, Dirk; Rammer, Christian; Aschhoff, Birgit
    Abstract: The paper analyzes how geographical clustering of beneficiaries might affect the effectiveness of public innovation support programs. The geographical proximity of firms operating in the same industry or field of technology is expected to facilitate innovation through knowledge spillovers and other localization advantages. Public innovation support programs may leverage these advantages by focusing on firms that operate in a cluster. We investigate this link using data from a large German program that co-funds R&D projects of SMEs in key technology areas called 'Innovative SMEs'. We employ three alternative cluster measures which capture industry, technology and knowledge dimensions of clusters. Regardless of the measure, firms located in a geographical cluster are more likely to participate in the program. Firms being part of a knowledge-based cluster significantly increases their chance of receiving public financial support. We find no effects, however, of geographical clustering on the program's effectiveness in terms of input or output additionality.
    Keywords: Innovation,Government Policy,Regional Government Analysis
    JEL: C35 H50 O31 O32 O38 R59
    Date: 2016
  7. By: Roberto Basile (Seconda Università di Napoli); Alessandro Girardi (ISTAT, Istituto Nazionale di Statistica); Marianna Mantuano (ISTAT, Istituto Nazionale di Statistica); Giuseppe Russo (Università di Salerno and CSEF)
    Abstract: The role of labour mobility on regional disparities is at the core of a heated debate: while standard competitive models posit that mobility works as an equilibrating device and reduces the unemployment, models featuring externalities lead to opposite conclusions. Against this backdrop, we present a simple two-region model adapted to the main features of the Italian North-South dualism that illustrates the effects of labour mobility with and without human capital externalities. We show that, when externalities are introduced, regional mobility may exacerbate regional unemployment disparities. Using longitudinal data over the years 2002- 2011 for 103 NUTS-3 Italian regions, we document that net outflows of human capital from the South to the North have increased the unemployment rate in the South and decreased the unemployment rate in the North. Our conclusions support the literature that finds an important role of regional externalities, and suggest that reducing human capital flight from Southern regions should be a priority.
    Keywords: Unemployment, Migration, Human capital, Externalities, Italian regions
    JEL: C23 R23 J61
    Date: 2016–12–08
  8. By: Calá, Carla Daniela; Manjón-Antolín, Miguel; Arauzo-Carod, Josep-Maria
    Abstract: We analyse the determinants of exit in a developing country using Argentina as an illustrative case. We focus on regional determinants but estimate panel count data models for firms of different size, thus indirectly controlling for a major firm-level determinant. We find that most of the determinants used in previous studies analysing developed countries are also relevant here. The fit of the model improves, however, when variables that proxy for the specificities of developing economies are considered. We also find that while the exit of micro-small firms seem to be mostly driven by factors that are commonly found in developed countries, large firms are more influenced by factors that are typically not considered in developed countries' studies. These results raise doubts about the usefulness of public policies based on evidence from developed countries and show the importance of a differentiated analysis across firm size.
    Keywords: Dinámica Empresarial; Cese de Actividad; Tamaño de la Empresa; Modelo de Panel; Argentina;
    Date: 2016
  9. By: Yao Amber Li (Hong Kong University of Science and Tech); Joseph Kaboski (University of Notre Dame); Wyatt Brooks (University of Notre Dame)
    Abstract: Industrial clusters are generally viewed as good for growth and development, but clusters can also enable non-competitive behavior. This paper studies the presence of non-competitive pricing in geographic industrial clusters. We develop, validate, and apply a novel identification strategy for collusive behavior. We derive the test from the solution to a partial cartel of perfectly colluding firms in an industry. Outside of a cartel, markups depend on a firm’s market share but not on the total market share of firms in the agglomeration, but in the cartel, markups are constant across firms and depend only on the overall market share of the agglomeration. Empirically, we validate the test using plants with a common owner, and we then test for collusion using data from Chinese manufacturing firms (1999-2009). We find strong evidence for non-competitive pricing within a subset of industrial clusters, and we find the level of non-competitive pricing is roughly four times higher in China’s “special economic zones†.
    Date: 2016
  10. By: Sari Pekkala Kerr; William Kerr; Çaǧlar Özden; Christopher Parsons
    Abstract: This paper reviews recent research regarding high-skilled migration. We adopt a data-driven perspective, bringing together and describing several ongoing research streams that range from the construction of global migration databases, to the legal codification of national policies regarding high-skilled migration, to the analysis of patent data regarding cross-border inventor movements. A common theme throughout this research is the importance of agglomeration economies for explaining high-skilled migration. We highlight some key recent findings and outline major gaps that we hope will be tackled in the near future.
    JEL: F15 F22 J15 J31 J44 L14 L26 O31 O32 O33
    Date: 2016–12
  11. By: Marco Di Cataldo; Andrés Rodríguez-Pose
    Abstract: The European Union promotes development strategies aimed at producing growth with “a strong emphasis on job creation and poverty reduction”. However, whether the economic conditions in place in EU regions are ideal for the generation of high- and low-skilled employment and labour market inclusion is unclear. This paper assesses how the key factors behind EU growth strategies – infrastructure, human capital, innovation, quality of government – condition employment generation and labour market exclusion in European regions. The findings indicate that the dynamics of employment and social exclusion vary depending on the conditions in place in a region. While higher innovation and education contribute to overall employment generation in some regional contexts, low-skilled employment grows the most in regions with a better quality of government. Regional public institutions, together with the endowment of human capital, emerge as the main factors for the reduction of labour market exclusion – particularly in the less developed regions – and the promotion of inclusive employment growth across Europe.
    Keywords: social exclusion; employment; skills; regions; Europe
    JEL: J64 O52 R23
    Date: 2016–10–04

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