nep-geo New Economics Papers
on Economic Geography
Issue of 2017‒07‒23
fifteen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Interstate Input-Output Matrix for Brazil: An Application of the IIOAS Method By Eduardo Amaral Haddad; Carlos Alberto Gonçalves Junior, Thiago Oliveira Nascimento
  2. Following Your Job By Martijn Smit
  3. Unrelated knowledge combinations: Unexplored potential for regional industrial path development By Grillitsch, Markus; Asheim, Bjorn; Trippl, Michaela
  4. Skill-Biased Technical Change and Regional Convergence By Elisa Giannone
  5. Regional inequality in decentralized countries: a multi-country analysis using LIS By Javier Martín-Román; Luis Ayala; Juan Vicente
  6. So close yet so unequal: Spatial inequality in American cities By ANDREOLI Francesco; PELUSO Eugenio
  7. The Growth of U.S. Science and Technology Parks: Does Proximity to a University Matter? By Kelsi, Hobbs; Albert, Link; John, Scott
  8. Towards an East German wage curve - NUTS boundaries, labour market regions and unemployment spillovers By Reinhold Kosfeld; Christian Dreger
  9. Incorporating spatial price adjustments in U.S. public policy analysis By John A. Bishop; Jonathan M. Lee; Lester A. Zeager
  10. The Geography of Consumption By Agarwal, Sumit; Jensen, J Bradford; Monte, Ferdinando
  11. The consequences of public employment: evidence from Italian municipalities By Marta Auricchio; Emanuele Ciani; Alberto Dalmazzo; Guido de Blasio
  12. Entrepreneurial Skills in Thick and Thin Markets By Artz, Georgeanne M.; Guo, Zizhen; Orazem, Peter F.
  13. Industrial Clusters, Organized Crime and Productivity Growth in Italian SMEs By Ganau, Roberto; Rodríguez-Pose, Andrés
  14. Science, technology and innovation for economic competitiveness: the role of smart specialization in less-developed countries. By Krammer, Sorin M.S.
  15. Spotlight on the beneficiaries of EU regional funds: A new firm-level dataset By Bachtrögler, Julia; Hammer, Christoph; Reuter, Wolf Heinrich; Schwendinger, Florian

  1. By: Eduardo Amaral Haddad; Carlos Alberto Gonçalves Junior, Thiago Oliveira Nascimento
    Abstract: This paper presents the process of estimation of an interregional input-output system for the 26 Brazilian states and the Federal District, in conditions of limited information, using the IIOAS method. IIOAS is consistent with the national input-output matrix and can be built for any country that publishes its SUTs, and has a regionalized sectoral information system. Subsequently, the commercial relations and productive structures of each state were analyzed. São Paulo and Rio de Janeiro were the most self-sufficient states. Roraima and Tocantins were the ones that presented the lowest levels of self-sufficiency. Regarding regional interdependence, Roraima and Acre were the states whose production showed less dependence on the final demand of other states, whereas Amazonas, Espírito Santo and Mato Grosso were the states in which the final demand of other states and exports exert most influence in the local production.
    Keywords: input-output; interregional; limited information
    JEL: C67 D57 R15
    Date: 2017–07–11
  2. By: Martijn Smit
    Abstract: Evolutionary economic geography has awoken an interest in the question how regions can attract new human capital. One method is to attract migration firms, who will bring (part of) their existing employees. These people can then attract or generate new jobs (Hoogstra, van Dijk, & Florax, 2005). In this paper, we study the mobility of employees when their firm decides to move: do they stick with their employer or not? And if they do, do they commute or not? Finally, we link the decision to commute longer distances to the availability of a company car. We use microdata on individual firms and employees to test whether employees choose to follow their firm to another region. We control for personal and job characteristics. We find that having a company car is not correlated with the decision to stay with or to leave the current firm, but those who have one are less likely to move house, as long as the employee has a wage in the top quartile, or lives in the urban areas of the Randstad with their stressed housing market. Employees who already experienced long commutes before their employer moved are not influenced by the presence of a company car. Length:
    JEL: J61 R23
    Date: 2017–07
  3. By: Grillitsch, Markus (KEG, Lund University); Asheim, Bjorn (University of Stavanger); Trippl, Michaela (University of Vienna)
    Abstract: The paper engages in a critical discussion of the related variety – regional branching argument and foregrounds a more differentiated perspective on regional industrial path development. It contributes by i) sharpening the definition of key concepts, namely specialisation and diversity, related and unrelated variety, ii) discussing their relevance in local and non-local spaces, iii) scrutinizing related variety as source for regional branching, and iv) developing a conceptual framework capturing the opportunity space for regional structural change that unveils the relevance of path upgrading, path importation, path branching, path diversification, and new path creation as different forms of new path development.
    Keywords: industrial path development; economic diversification; regional structural change; specialisation and diversity; related and unrelated variety; knowledge base combinations
    JEL: B52 O10 R10 R58
    Date: 2017–07–10
  4. By: Elisa Giannone (University of Chicago)
    Abstract: Poorer US cities were catching up with richer ones at an annual rate of roughly 1.4% between 1940 and 1980. However, wage convergence across US cities went from 1.4% a year between 1940 and 1980 to 0% a year between 1980 and 2010. This paper quantifies the contributions of skill-biased technical change (SBTC) and agglomeration economies to the end of cross-cities wage convergence within the US between 1980 and 2010. I develop and estimate a dynamic spatial equilibrium model that looks at the causes of the decline in spatial wage convergence. The model choice is motivated by novel empirical regularities regarding the evolution of the skill premium and migration patterns over time and across space. The model successfully matches the quantitative features of the decline in US regional wage convergence, as well as other stylized facts on US economic growth. Moreover, the model also reproduces the convergence and the divergence in the skill ratio across US cities and other features on quantities, such as the secular decline in within US migration after 1980. Finally, the counterfactual analysis suggests that SBTC explains the approximately the 80% of the decline of regional convergence between 1980 and 2010 among high skill workers.
    Date: 2017
  5. By: Javier Martín-Román; Luis Ayala; Juan Vicente
    Abstract: The aim of this paper is to analyze the regional disparities of six decentralized countries using LIS microdata. In order to determine the extent of the territorial variable in the explanation of income inequality, we carry out two complementary analyses. On the one hand, we perform the classical decomposition by population subgroups of different inequality measures. On the other hand, we implement a semiparametric decomposition analysis based on the method proposed by DiNardo, Fortin and Lemieux.
    Keywords: income inequality,regional inequality,subgroup decomposition,semiparametric decomposition
    JEL: D31 D33 R23
    Date: 2017–05
  6. By: ANDREOLI Francesco; PELUSO Eugenio
    Abstract: Rich income data and a new methodology are employed to investigate patterns and consequences of spatial inequality in American cities over the last 35 years. New Gini-type indices, which assess spatial inequality using individual neighborhoods of variable size as primitives, uncover from the data robust evidence of growing income inequality within the neighborhood. The welfare implications of this trend are investigated through reduced-form models, addressing potential bias due to sorting across and within cities. An exogenous increase of the income mix in the neighborhood is found to yield a signi cant drop in intergenerational mobility gains for young people.
    Keywords: Neighborhood inequality; Gini; individual neighborhood; geostatistics; census; ACS; causal neighborhood effects; life expectancy; divided city; mixed city
    JEL: C21 D33 D63 I23 J22 R23
    Date: 2017–07
  7. By: Kelsi, Hobbs (University of North Carolina at Greensboro, Department of Economics); Albert, Link (University of North Carolina at Greensboro, Department of Economics); John, Scott (Dartmouth College)
    Abstract: In this paper, we present a generalized model of U.S. university science and technology parks, and we identify covariates that might serve as target variables not only to perpetuate the growth of existing parks but also to provide information for those nations, regions, and universities starting new parks. Relevant covariates are the distance between the park and the university and if the park was founded during the information and communications technology (ICT) revolution (post-2000).
    Keywords: science park; technology park; geographic location; ICT
    JEL: O32 O51 R11 R12
    Date: 2017–07–11
  8. By: Reinhold Kosfeld (University of Kassel); Christian Dreger (German Institute of Economic Research (DIW Berlin) and European University Viadrina Frankfurt (Oder))
    Abstract: The relevance of spatial effects in the wage curve can be rationalized by the model of monopsonistic competition in regional labour markets. However, distortions in extracting the regional unemployment effects arise in standard regional (i.e. NUTS) classifications as they fail to adequately capture spatial processes. In addition, the nonstationarity of wages and unemployment is often ignored. Both issues are particularly important in high unemployment regimes like East Germany where a wage curve is difficult to establish. In this paper, labour market regions defined by economic criteria are used to examine the existence of an East German wage curve. Due to the nonstationarity of spatial data, a global panel cointegration approach is adopted. By specifying a spatial error correction model (SpECM), equilibrium adjustments are investigated in time and space. The analysis gives evidence on a locally but not a spatially cointegrated wage curve for East Germany.
    Keywords: Wage curve, labour market regions, global cointegration, spatial error-correction model
    JEL: J30 J60 C33 R15
    Date: 2017
  9. By: John A. Bishop (Department of Economics East Carolina University, Greenville, NC 27858, USA); Jonathan M. Lee (Department of Economics East Carolina University, Greenville, NC 27858, USA); Lester A. Zeager (Department of Economics East Carolina University, Greenville, NC 27858, USA)
    Abstract: The U.S. Bureau of Economic Analysis has recently released regional price parities (RPPs) for the 325 Standard Metropolitan Statistical Areas and the 50 state nonmetropolitan areas. We consider the effects of RPP adjustments on four public policy issues: poverty rates, family income inequality, tax progressivity, and metropolitan-size premiums. We demonstrate that RPP adjustments strongly affect the spatial distribution of U.S. poverty, have an equalizing effect on income inequality (equivalent to a $1,500 cash transfer to each U.S. family), and also increase effective federal tax progressivity by more than 25 percent. Income premiums for the major metropolitan areas largely disappear after adjusting for spatial prices and controlling for the characteristics of family heads. Metro-size premiums also depend on whether we adjust incomes by the overall RPPs or a narrower housing-price index (as in earlier research). We conjecture that other public policy findings are sensitive to adjustments for spatial price differences.
    Keywords: regional price parities, poverty, inequality, tax progressivity, metro-size premiums.
    JEL: D31 H23 I32 R32
    Date: 2017–05
  10. By: Agarwal, Sumit; Jensen, J Bradford; Monte, Ferdinando
    Abstract: We use detailed information from U.S. consumers' credit card purchases to provide the first large-scale description of the geography of consumption. We find that consumers' mobility is quite limited and document significant heterogeneity in the importance of gravity across sectors. We develop a simple model of consumer behavior, emphasizing the role of the durability/storability of products, to organize the main stylized facts. Heterogeneity in the storability of products across sectors generates a positive correlation between the strength of gravity and the frequency of transactions at the sector level; this correlation is a clear feature of the data. Using daily rain precipitation from thousands of weather stations in U.S., we show that shocks to travel costs change the spatial distribution of expenditure, and they do so differentially across sectors: hence, the level and heterogeneity of travel costs' shape the level and elasticity of any merchant's demand. This evidence suggests that incorporating the demand-side is essential to analyzing the distributional consequences of local and aggregate shocks across regions. These results also suggest the demand-side is critical to understanding the location of firms and employment in the large and understudied service sector.
    JEL: F1 F14 L8 R1 R2
    Date: 2017–07
  11. By: Marta Auricchio (Bank of Italy); Emanuele Ciani (Bank of Italy); Alberto Dalmazzo (University of Siena); Guido de Blasio (Bank of Italy)
    Abstract: We investigate the consequences of public employment on local economies. We start by presenting a spatial-equilibrium framework, to highlight that the housing market is an important channel through which a variation in public employment affects private employment. We then provide empirical evidence from Italian municipalities, focusing on the strong contraction in the public sector workforce that occurred between the last two Censuses (2001-2011). We use an IV identification strategy that exploits the fact that variations in local public employment were strongly influenced by central government decisions, with little reference to the economic conditions of the municipalities. Our results suggest that exogenous contractions in public employment lead to an increase of private jobs, and that competition in the housing market seems to be a relevant explanation for this finding.
    Keywords: local labor markets, public employment
    JEL: J45 J60 R12
    Date: 2017–07
  12. By: Artz, Georgeanne M.; Guo, Zizhen; Orazem, Peter F.
    Abstract: Firm profitability is affected by location-specific factors such as agglomeration economies, infrastructure, or proximity to consumers or key producers. Location-specific profits are also influenced by the idiosyncratic match between the entrepreneur and the community. Using data on the universe of all new firm entrants in North Carolina and Iowa between 1992–2011, this study shows how observed location-specific factors affect the probability of new firm entry. We then show that the unobserved factors that influence new firm entry increase the probability of firm survival, demonstrating that these unobserved idiosyncratic factors influence firm profitability and are not just unproductive entrepreneurial preferences for the location.These unobserved factors are interpretable as match capital between the entrepreneur and the location. Shift-share analysis demonstrates that the match capital varies systematically across urban locations, meaning that the match capital can be incorporated into property values in densely populated markets. However, the match capital varies disproportionately within and not between rural markets, meaning that match capital in thin markets is primarily due to a unique match between the entrepreneur and the rural location. These results suggest that it will be easier to transfer firm profitability in the case of a firm sale in dense urban markets than in thin rural markets.
    Date: 2017–07–07
  13. By: Ganau, Roberto; Rodríguez-Pose, Andrés
    Abstract: We examine whether organized crime affects firms' performance (defined using Total Factor Productivity growth) both directly and indirectly, by downsizing the positive externalities arising from the geographic concentration of (intra- and inter-industry) market-related firms. The analysis uses a large sample of Italian small- and medium-sized manufacturing firms over the period 2010-2013. The results highlight the negative direct effects of organized crime on firms' productivity growth. Any positive effect derived from industrial clustering is thoroughly debilitated by a strong presence of organized crime, and the negative moderation effect of organized crime on productivity growth is greater for smaller than for larger firms.
    Keywords: Total Factor Productivity; Organized crime; Industrial clustering; Externalities; Italy
    JEL: D24 L25 R11 R12
    Date: 2017–07
  14. By: Krammer, Sorin M.S.
    Abstract: Smart specialization (SS) is a policy concept that has gained significant momentum in Europe despite a frail theoretical background and implementation difficulties. These challenges become critical in the case of less-developed economies that often lack regional autonomy, a strong STI base, and local capabilities to identify and sustain such SS strategies. Combining elements from evolutionary economics and the export-led literature, I propose a framework that anchors the role of SS in the national innovation policy of such laggards, as a complementary avenue for improving competitiveness and growth. Moreover, to assist policy makers in lagging regions or countries, I advance a diagnostic tool to identify potential areas for SS, and also address the systemic and the regional-sectoral bottlenecks in these domains. I exemplify the use of this tool in the case of Bulgaria by using a large battery of quantitative and qualitative indicators from publicly available data. This type of investigation may be useful for other less-developed economies to kick-start this process and identify prima facie SS candidates.
    Keywords: Smart Specialization; Innovation Systems; Exports; Patents; Scientific publications;
    JEL: F14 O14 O31 O38 O52
    Date: 2015–12–05
  15. By: Bachtrögler, Julia; Hammer, Christoph; Reuter, Wolf Heinrich; Schwendinger, Florian
    Abstract: This study introduces a new firm-level dataset containing over two million projects co-funded by the European Union's (EU) structural and Cohesion funds in 25 EU member states in the multi-annual financial framework 2007-2013. Information on individual beneficiary firms and institutions published by regional authorities is linked with business data from Bureau van Dijk's ORBIS database. Moreover, we show how modern text mining techniques can be used to categorise EU funded projects into fifteen thematic categories proposed by the European Commission. A first analysis of the dataset reveals substantial heterogeneity of beneficiaries and projects across and within countries. While in the majority of lagging regions the largest project expenditure is dedicated to transportation and energy infrastructure, in most other regions the major part is assigned to innovation and technological development as well as business (including SME) support. In an econometric analysis we control for project and firm characteristics and find that the highest single project values are associated with older beneficiary firms that are larger in size. Furthermore, the projects with topmost expenditure are carried out in Dutch and British regions.
    Keywords: Distribution of EU structural funds,Regional policy,Firm-level data,Cohesion,European Union
    JEL: E61 H77 R11 R58
    Date: 2017

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