nep-geo New Economics Papers
on Economic Geography
Issue of 2017‒02‒19
thirteen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. : Innovation policies for regional structural change: Combining actor-based and system-based strategies By Isaksen, Arne; Tödtling, Franz; Trippl, Michaela
  2. Natural Amenities, Neighborhood Dynamics, and Persistence in the Spatial Distribution of Income By Lee, Sanghoon; Lin, Jeffrey
  3. Vetoing and Inaugurating Policy Like Others Do: Evidence on Spatial Interactions in Voter Initiatives By Streif, Frank; Asatryan, Zareh; Havlik, Annika
  4. Building effective clusters and industrial parks: By Zhang, Xiaobo
  5. A Spatial Econometric Analysis of Land Use Efficiency in Large and Small Municipalities By Guastella, Gianni; Pareglio, Stefano; Sckokai, Paolo
  6. Cost-benefit analysis of transport improvements in the presence of spillovers, matching and an income tax By Eliasson , Jonas; Fosgerau, Mogens
  7. Spatial Dependence in Apartment Offering Prices in Hamburg By Eilers, Lea
  8. How do inventor networks affect urban invention? By Laurent BERGÉ; Pascale ROUX; Nicolas CARAYOL
  9. Benefits of dense labour markets - Evidence from transitions to employment in Germany By Niebuhr, Annekatrin
  10. Agglomeration Effects and Liquidity Gradients in Local Rental Housing Markets By Ruf, Daniel
  11. Regional Inequality, Convergence, and its Determinants - A View from Outer Space By Leßmann, Christian; Seidel, André
  12. Rethinking Detroit By Owens, Raymond; Rossi-Hansberg, Esteban; Sarte, Pierre-Daniel
  13. Gravity, Distance, and International Trade By Baier, Scott; Kerr, Amanda; Yotov, Yoto

  1. By: Isaksen, Arne; Tödtling, Franz; Trippl, Michaela
    Abstract: There seems to be a widespread consensus in academic and policy circles that the promotion of current economic strongholds and specialisations is no longer sufficient in order to ensure the long-term competitiveness of regions. New policy concepts such as smart specialisation emphasize the need to break with past practices and design and implement innovation strategies that boost regional structural change, i.e. policies that support regional economies to renew their industrial base by diversifying into new but related economic fields or creating entirely new sectors. This new strategic orientation for regional innovation policies has essentially been informed by evolutionary economic geography, which has offered novel insights into how regional economies transform over time and how new growth paths come into being. Applying a regional innovation system (RIS) perspective, recent work has enhanced our understanding of how such processes of regional economic change vary across different types of regions. RIS differ enormously in their capacity to develop new growth paths due to pronounced differences in endogenous potentials and varying abilities to attract and absorb exogenous sources for new path development. The policy implications following from these recent findings on the uneven geography of new path development have hardly been thoroughly discussed so far. General claims such as the need to avoid "one size fits all" strategies and develop place-based policies for regional industrial change remain vague and provide little guidance in this regard. The aim of this paper is to identify opportunities and limitations of regional innovation policies to promote new path development in different types of RIS. We distinguish between (1) organisationally thick and diversified RIS, (2) organisationally thick and specialized RIS and (3) thin RIS. Regarding path development, a distinction is drawn between the extenstion, modernization, importation, branching and creation of industrial paths, reflecting various degrees of radicalness of change in regional economies. The paper offers a conceptual analysis of conditions and influences that enable and constrain new path development in each RIS type and outlines the contours of policy strategies that are suitable for promoting new path development in those different types of RIS. Our point of departure is the well-known distinction between system-based and actor-based policy approaches. The former aims to improve the functioning of the RIS by targeting system failures, promoting local and non-local knowledge flows and adapting the organisational and institutional set-up of the RIS. Actor-based strategies, in contrast, support entrepreneurs and innovation projects by firms and other stakeholders. We argue that both strategies will have only a limited impact on regional economic change when applied alone. However, if they are combined, they are well suited to promote new path development. The paper discusses which specific combinations of system-based and actor-based policy strategies matter for different types of RIS. (authors' abstract)
    Date: 2016–10
  2. By: Lee, Sanghoon (Federal Reserve Bank of Philadelphia); Lin, Jeffrey (Federal Reserve Bank of Philadelphia)
    Abstract: We present theory and evidence highlighting the role of natural amenities in neighborhood dynamics, suburbanization, and variation across cities in the persistence of the spatial distribution of income. Our model generates three predictions that we confirm using a novel database of consistent-boundary neighborhoods in U.S. metropolitan areas, 1880{2010, and spatial data for natural features such as coastlines and hills. First, persistent natural amenities anchor neighborhoods to high incomes over time. Second, naturally heterogeneous cities exhibit persistent spatial distributions of income. Third, downtown neighborhoods in coastal cities were less susceptible to the widespread decentralization of income in the mid-20th century and experienced an increase in income more quickly after 1980.
    Keywords: suburbanization; gentri cation; locational fundamentals; multiple equilibria
    JEL: N90 O18 R23
    Date: 2017–01–30
  3. By: Streif, Frank; Asatryan, Zareh; Havlik, Annika
    Abstract: A sizeable literature studies whether governments strategically interact with each other through policy-diffusion, learning, fiscal and yardstick competition. This paper asks whether, in the presence of direct democratic institutions, spatial interactions additionally result from voters' direct actions. The proposed mechanism is that the voters' actions in vetoing a decision or inaugurating a preferred policy by a binding initiative in their jurisdiction can potentially have spillover effects on the actions of voters and special interest groups of neighboring jurisdictions. Utilizing data on around 1,800 voter-petitions across over 12,000 German municipalities in 2002-09, we find that a jurisdiction's probability of hosting a petition is positively driven by the neighbors' direct democratic activity. These effects are persistent, and are stronger for more visible instruments of direct democracy. The interactions are also mostly driven by petitions in same or similar policy areas, and are stronger in towns with relatively more per capita newspapers.
    JEL: D72 D78 R50
    Date: 2016
  4. By: Zhang, Xiaobo
    Abstract: It is a daunting task to build institution and infrastructure over a short time period in developing countries. But in the absence of sound institutions and adequate infrastructure, it is difficult for economic transformation to take place. An alternative is to facilitate existing industrial clusters or build industrial parks by creating an enabling environment in a limited place. This paper reviews the commonly used strategies to build effective clusters and industrial parks. Clusters and industrial parks are location specific. Because they have an informational advantage, local governments are in a better position than the central government to identify and solve the bottlenecks that affect clusters and industrial parks. As clusters and industrial parks evolve, new bottlenecks emerge, thereby requiring new solutions. This in turns calls for continuous tinkering by local governments. It is important to place local governments and business communities in the driver’s seat of local economic growth so that they can watch out for and adjust to the bumps in the road ahead.
    Keywords: industrialization, economic development, economic policies,
    Date: 2016
  5. By: Guastella, Gianni; Pareglio, Stefano; Sckokai, Paolo
    Abstract: We estimate the relationship between urban spatial expansion and its socio-economic determinants in Lombardy, the most urbanised region of Italy (and one of the most urbanized of the European Union), at the municipality level. Test results suggest that this relationship varies significantly among municipalities of different size and findings support the hypothesis that larger ones are more efficient in managing land take. In particular, we find that the marginal land consumption per new household is inversely related to the size of the municipality and we link this evidence to the fact that, since more space is often available, small municipalities pay less institutional attention to the issue of land take and consequently internalise less the environmental externalities. This evidence calls for a reflection on the role of planning policies and the effectiveness of undifferentiated measures to contain land take, especially in the case of Italy, where the municipalities, more than 99% of which have less than 50,000 inhabitants, decide on land use transformations.
    Keywords: Land Take, City Size, Threshold Regression, Spatial Econometrics, Community/Rural/Urban Development, O18, Q15, R14,
    Date: 2017–02–08
  6. By: Eliasson , Jonas (KTH); Fosgerau, Mogens (Technical University of Denmark)
    Abstract: This paper addresses the problem of measuring the welfare benefits of a transport improvement. We formulate and analyze a rich spatial model that allows for spillovers, matching and income tax, in a setting with multiple work and residential locations and very general worker heterogeneity. The conventional consumer surplus captures part of the benefits and is calculated based on predictions of changes in travel demand and transport costs. The issue is to determine which socalled wider impacts to add to this. We find that adding the change in total output as a wider impact leads to doublecounting of benefits. The output change due to spillovers should be added, while the output change due to matching is already partly included in the consumer surplus. These results are useful for applied costbenefit analysis of transport policies.
    Keywords: Agglomeration; Spillovers; Matching; Cost benefit analysis; Transport policy.
    JEL: R40
    Date: 2017–02–07
  7. By: Eilers, Lea
    Abstract: This paper applies spatial econometric techniques to a hedonic apartment price model employing maximum-likelihood techniques. Accounting for spatial dependence of Apartment offering prices in Hamburg, Germany, the empirical analysis uses a semi-logarithmic price equation based on 4,029 offered apartments between 2008 and 2010. Starting with the traditional hedonic OLS-regression, we assess presence of spatial dependence using Lagrange Multiplier test statistics for error and lag dependence. These tests leads us to the spatial Durbin model and a spatial weight matrix based on the 15 nearest neighbors. Estimation results show that apartment prices exhibit a positive relationship with neighboring apartments. In addition to a high spatial autoregressive parameter, the estimated indirect effects (following the methodology of LeSage and Pace [2009]) show significant results. Consequently, a change in a single explanatory variable in a particular apartment not only affects the apartment price itself but also the price of neighboring apartments. Following the estimation results, spatial dependence is present, least- square estimates are biased and spatial hedonic models do explain more of the price variation with significant indirect effects in the spatial Durbin model.
    JEL: C23 R23 R31
    Date: 2016
  8. By: Laurent BERGÉ; Pascale ROUX; Nicolas CARAYOL
    Abstract: Social networks are expected to matter for invention in cities, but empirical evidence is still puzzling. In this paper, we provide new results on urban patenting covering more than twenty years of European patents invented by nearly one hundred thousand inventors located in France. Elaborating on the recent economic literatures on peer effects and on games in social networks, we assume that the productivity of an inventor\'s efforts is positively affected by the efforts of his or her partners and negatively by the number of these partners\' connections. In this framework, inventors\' equilibrium outcomes are proportional to the square of their network centrality, which encompasses, as special cases, several well-known forms of centrality (Degree, Katz-Bonacich, Page-Rank). Our empirical results show that urban inventors benefit from their collaboration network. Their productivity increases when they collaborate with more central agents and when they have more collaborations. Our estimations suggest that inventors\' productivity grows sublinearly with the efforts of direct partners, and that they incur no negative externality from them having many partners. Overall, we estimate that a one standard deviation increase in local inventors\' centrality raises future urban patenting by 13%.
    Keywords: invention, cities, network centrality, co-invention network, patent data
    JEL: O31 R11 D85
    Date: 2017
  9. By: Niebuhr, Annekatrin
    Abstract: Agglomeration economies may impact on productivity in different ways. Up to now, only a few papers try to provide evidence on the underlying mechanisms that might give rise to a positive correlation between agglomeration and wages. In this analysis we focus on the matching mechanism, i.e. the hypothesis that the size of the local labour market allows for better matching of job seekers and vacancies. Better matches in turn are supposed to give rise to higher productivity. We aim at providing new evidence on the importance of the matching mechanism and investigate the effects of the density of local labour markets on the wages of new employment relationships. The analysis is based on a large micro data set that offers detailed information on labour market biographies of workers in Germany. We apply the two-stage regression approach proposed by Combes et al. (2008) and distinguish between different types of transition, i.e. job-to-job transitions as well as transitions from shor tand long-term unemployment. The results point to rather small positive effects on productivity: a doubling of the employment density increases the productivity of new employment relationships by 1.1% to 1.4%. Moreover, the findings indicate that the benefits of a better match might only accrue to persons with a job-to-job transition as well as short-term unemployed. We detect no important impact of agglomeration for transitions from long-term nonemployment.
    JEL: J31 R23 C23
    Date: 2016
  10. By: Ruf, Daniel
    Abstract: This paper empirically analyzes the relation between local liquidity in rental housing markets and urban agglomeration effects. Using listed rent offers from online market platforms, I study the cross-sectional variation of rental market liquidity. Local liquidity is negatively related to the distance to nearby located urban agglomeration centers, manifesting in a decreasing liquidity gradient. I show that agglomeration externalities expose local rental markets to a systematic liquidity risk. Furthermore, more thinly traded rental markets offer lower capitalization rates for investors.
    Keywords: Urban Agglomeration Effects, Liquidity, Rental Housing Market
    JEL: G12 R31 R40
    Date: 2017–02
  11. By: Leßmann, Christian; Seidel, André
    Abstract: This paper provides a new data set of regional income inequalities within countries based on satellite nighttime light data. We first empirically study the relationship between luminosity data and regional incomes for those countries where regional income data are available. We subsequently use our estimation results for an out-of-sample prediction of regional incomes based on the luminosity data, which allows us to investigate regional income differentials in developing countries as well, where official income data are lacking. Based on the predicted incomes, we calculate commonly used measures of regional inequality within countries. Investigating changes in the dispersion of regional incomes over time reveals that approximately 71-80% of all countries face sigma-convergence. Finally, we study different major determinants of the level of regional inequality based on cross-section data. Panel regressions investigate the within-country changes in inequality, i.e., the determinants of the convergence process. We find evidence for an N-shaped relationship between development and regional inequality. Geography, mobility and trade openness are also highly important.
    JEL: D30 O11 R12
    Date: 2016
  12. By: Owens, Raymond; Rossi-Hansberg, Esteban; Sarte, Pierre-Daniel
    Abstract: We study the urban structure of the City of Detroit. Following several decades of decline, the city's current urban structure is clearly not optimal for its size, with a business district immediately surrounded by a ring of largely vacant neighborhoods. We propose a model with residential externalities that features multiple equilibria at the neighborhood level. In particular, developing a residential area requires the coordination of developers and residents, without which it may remain vacant even if its fundamentals are sound. We embed this mechanism in a quantitative spatial economics model and use it to rationalize current city allocations. We then use the model to evaluate existing strategic visions to revitalize Detroit, and to design alternative plans that rely on `development guarantees' to yield better outcomes. The widespread effects of these policies underscore the importance of using a general equilibrium framework to evaluate policy proposals.
    Keywords: cities; Manufacturing; Revitalization; Rustbelt; Urban Decline; urban structure
    JEL: I0 R0
    Date: 2017–02
  13. By: Baier, Scott (Clemson University); Kerr, Amanda (Clemson University); Yotov, Yoto (School of Economics)
    Abstract: We review and interpret the main theoretical developments in the gravity literature from its very early, a-theoretical applications to the latest structural contributions. We also discuss challenges and implement methods to estimate empirical gravity equations. We finish with a presentation and examples of numerical simulations with the structural gravity model. Throughout the analysis we attempt to emphasize the links and importance of transportation costs for the trade literature and we outline avenues where we believe interdisciplinary contributions between the international trade and transportation economics fields will be most valuable.
    Keywords: Structural Gravity; Estimation; Simulation; Transportation Costs
    JEL: F10 F11 F14 F17 R40
    Date: 2017–02–12

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