nep-geo New Economics Papers
on Economic Geography
Issue of 2017‒01‒22
seven papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Assessing the Spatial Concentration of Indonesia's Manufacturing Sector: Evidence from Three Decades By Rothenberg, Alexander D.; Bazzi, Samuel; Nataraj, Shanthi; Chari, Amalavoyal V.
  2. New evidence on the wage curve: non-linearities, urban size, and spatial scale in Brazil By Ana Maria Bonomi Barufi; Eduardo A. Haddad, Peter Nijkamp
  3. From Rivers to Roads: Spatial Mismatch and Inequality of Opportunity in Urban Labor Markets of a Megacity By Eduardo A. Haddad; Ana Maria Bonomia Barufi
  4. The domestic productivity effects of FDI in Greece: loca(lisa)tion matters! By Jacob A. Jordaan; Vassilis Monastiriotis
  5. Disentangling Innovation in Small Food Firms: The role of External Knowledge, Support, and Collaboration By Wixe, Sofia; Nilsson, Pia; Naldi, Lucia; Westlund, Hans
  6. Location and wages: the contribution of firm and worker effects in Brazil By Diana Lúcia Gonzaga da Silva; Carlos Roberto Azzoni
  7. Desarrollo económico y espacial desigual: panorama teórico y aproximaciones al caso colombiano By Rojas Rivera, Angela Milena; Rengifo López, Juan Camilo

  1. By: Rothenberg, Alexander D.; Bazzi, Samuel; Nataraj, Shanthi; Chari, Amalavoyal V.
    Abstract: Beyond the role of economic forces, many theories of economic geography emphasize the way politics can shape the spacial configuration of economic activity. We investigate the impact of changes in political regimes on industrial concentration using 30 years of data on Indonesian manufacturers. These data span both the reign of Suharto, one of the strongest central governments in Southeast Asia, and its collapse and the subsequent decentralization of power. Using the canonical measure of Ellison and Glaeser, we show that in the mid 1980s, Indonesia's firms exhibited a similar degree of agglomeration as seen in the United States. Spatial concentration then declined until the 1998 Asian Financial Crisis, and has since begun to rise during the decentralization period. We also measure concentration using the continuous measure developed by Duranton and Overman (2005), and find that the agglomeration exhibited by Indonesian firms is also broadly similar to that documented by Duranton and Overman (2005 ) for the United Kingdom, although localization drops off more gradually in Indonesia than in the United Kingdom. Using this continuous measure of agglomeration, we identify 32 manufacturing clusters in Indonesia, and investigate the correlates of concentration. We find that the most robust drivers of agglomeration have been natural resources and supply chain linkages, especially with respect to explaining long-term changes in spatial concentration.
    Date: 2017–01
  2. By: Ana Maria Bonomi Barufi; Eduardo A. Haddad, Peter Nijkamp
    Abstract: Agglomeration economies appear to have a significant impact on local labour markets. The interaction of workers and firms in dense urban areas may generate productivity advantages that result in higher wages. City size plays an important role in the relative bargaining power of workers and firms in the relevant labour market. When analysing the relationship between local wages and the business cycle – wage flexibility, measured by the wage curve –, this influence appears to be higher in informal sectors in less densely populated areas in Brazil. Therefore, large agglomerations are supposed to provide a higher bargaining power for workers, as they have more job opportunities. In addition, labour market dualism is an essential ingredient in the evaluation of the wage curve in developing economies. However, a dual labour market analysis should be conducted at the appropriate regional level (labour market areas), making it possible to find a relevant impact of city size on the relative bargaining power of workers and firms. Our study aims to shed new theoretical and empirical light on the importance of the wage curve, taking into account various specificities of developing economies. The applied modelling study in Brazil shows that wage flexibility is higher in less dense local labour markets and in the informal sector in relation to the formal sector. Furthermore, it is essential to control for unobserved local characteristics in order to obtain the ‘true’ elasticity of wages to local unemployment rates, and spatial effects should be accounted for when the unit of analysis is rather small. In this sense, a significant part of the difference between the formal and the informal sectors originates from spatial effects.
    Keywords: wage curve; informal sector; bargaining power; agglomeration; rural-urban dichotomy.
    JEL: R12 J31 J46
    Date: 2016–12–16
  3. By: Eduardo A. Haddad; Ana Maria Bonomia Barufi
    Abstract: The spatial mismatch between residential locations and jobs can be particularly relevant for low-skilled individuals. In this paper, we first explore such phenomenon from the perspective of the distance of the residence to the geographic concentration of jobs, and locational disadvantages of the urban form itself. Such unequal conditions in the labor market present a great challenge for the spatial sustainability of the multiple equilibria achieved simultaneously at the labor and the housing markets. We estimate the main aspects that influence wage differentials among individuals, focusing on the role of accessibility on labor market outcomes. We suggest the inclusion of geographical characteristics as instruments to deal with endogeneity problems that arise in the estimation of urban price models. Our strategy is based on the inclusion of a specific geographic/historic variable as instrument, namely the river shore access to the first school built by the Jesuits in São Paulo, the city’s founding location. Geography acted as a determinant of the location of the transportation infrastructure in the region, so that the road and rail networks in the city present a strong spatial correlation with pre-urban “waterways”. Nowadays, the vast majority of rivers and creeks are covered with asphalt and cement, and economic agents are practically unaware of their existence.
    Keywords: Accessibility; inequality; urban labor market; São Paulo Metropolitan Region
    JEL: R14 C26
    Date: 2016–12–16
  4. By: Jacob A. Jordaan; Vassilis Monastiriotis
    Keywords: FDI; agglomeration; regional externalities; spatial heterogeneity; Greece
    JEL: N0
    Date: 2016–12
  5. By: Wixe, Sofia (Centre for Entrepreneurship and Spatial Economics (CEnSE), Jönköping International Business School, Sweden); Nilsson, Pia (Centre for Entrepreneurship and Spatial Economics (CEnSE), Jönköping International Business School, Swede); Naldi, Lucia (Centre for Family Enterprise and Ownership (CeFEO ), Jönköping International Business School, Sweden); Westlund, Hans (Centre for Entrepreneurship and Spatial Economics (CEnSE), Jönköping International Business School, & KTH Royal Institute of Technology, Sweden)
    Abstract: This paper applies unique survey data on innovation and external interaction of small food producers in Sweden. The overall purpose is to test if firms that are more engaged in external interaction are more innovative. To disentangle innovativeness beyond new goods and services, innovation is measured as new processes, new markets, new suppliers, new ways of organization, and new distributors. Findings point to a positive relationship between firm innovation and external interaction, both in terms of collaboration, external knowledge and support from regional actors. In particular, collaboration regarding transports and sales is shown to enhance most types of innovation. Product and process innovation benefit from external knowledge from extra-regional firms as well as regional support from the largest firm. Findings suggest that current innovation policies can improve their efficiency by increasing their flexibility to enable tailor-made innovation policies at the local level.
    Keywords: Innovation; collaboration; food industry; rural regions
    JEL: L25 L66 O31 R12
    Date: 2017–01–16
  6. By: Diana Lúcia Gonzaga da Silva; Carlos Roberto Azzoni
    Abstract: The objective of this paper is to assess the contribution of unobservable firm and individual heterogeneity for the location effects on wages and for the variation of wages in Brazil. In the first stage we estimate the effects of location through a wage equation, controlling for observable worker characteristics and unobserved heterogeneity of workers and firms. In a second stage, the estimated location effects are regressed on the fixed effects of firms and workers. We use micro data panel for the period 1995-2008 (RAIS-Migra). We estimate the model proposed by Abowd et al. (1999) for the wage decomposition, to deal with multiple fixed effects in large databases matching workers and firms. One contribution of this paper is to deal with more controls than usual in this type of analysis. As for the literature on the Brazilian case, the simultaneous control for firm and worker effects is also an important contribution. The findings show that firm and worker effects account for a substantial variation of wages across individuals (93%) and for the variation in location effects across metropolitan areas (95%). In the first and second stages individual characteristics are more important than firm effect to explain wage differentials (individuals 91%, firms 80%) and location effects (92%, 41%). Controlling for all these effects, the “pure” agglomeration effects would amount to only 5%. Therefore, both effects account for substantial shares of the variation of real wages and location effects on wages in Brazil.
    Keywords: wage determination; sorting; firm effects; location effects; individual effects
    JEL: J24 J31 R23 C23
    Date: 2016–12–16
  7. By: Rojas Rivera, Angela Milena; Rengifo López, Juan Camilo
    Abstract: Este artículo presenta una revisión de la literatura sobre las teorías del desarrollo y crecimiento económico desigual y del desarrollo espacial desigual, destacando la conexión con el proceso de globalización mundial y los cambios en la relación Nación-región. Así mismo presenta una recopilación de las investigaciones que en este tema se han hecho sobre el caso colombiano desde la economía, la geografía económica y la historia económica y también, aunque en menor medida, desde la historia y la geografía. El panorama teórico señala una transición desde análisis en donde el espacio económico y el espacio geográfico son abordados independientemente, hacia análisis que reconocen sus relaciones intrínsecas. No obstante, aún no existe un marco teórico que genere fuertes consensos, al tiempo que la globalización actual desarticula relaciones sistemáticas entre la Nación y la región. La revisión de literatura aplicada a Colombia indica la concentración de estudios realizados por economistas sobre la convergencia en ingreso neoclásica durante las décadas de 1990 y 2000. Una vez agotado este análisis tradicional aparecerán algunos estudios sobre geografía económica, convergencia social e historia económica. Según estos estudios en Colombia las disparidades regionales y la polarización de Bogotá frente al resto del país han aumentado desde, al menos, 1990. Precisamente esta persistencia del crecimiento y el desarrollo desigual en el país reclama mayor investigación y discusión pública sobre las estrategias adecuadas de desarrollo económico de largo plazo de cara al siglo XXI.
    Keywords: Desarrollo económico desigual, desarrollo espacial desigual, historia económica, geografía económica, crecimiento económico, globalización, Colombia, convergencia
    JEL: O19 O21 O43 N10 N30 R11 R12
    Date: 2016–11–01

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