nep-geo New Economics Papers
on Economic Geography
Issue of 2017‒10‒29
ten papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Geographical Advantage: Home Market Effect in a Multi-Region World By Matsuyama, Kiminori
  2. Does population diversity matter for economic development in the very long-term? Historic migration, diversity and county wealth in the US By Rodríguez-Pose, Andrés; von Berlepsch, Viola
  3. The Importance of Mittelstand Firms for Regional Apprenticeship Activity By Jahn, Vera
  4. The view from space: Theory-based time-varying distances in the gravity model By Hinz, Julian
  6. Creativity over Time and Space By Serafinelli, Michel; Tabellini, Guido
  7. Ethnic Geography: Measurement and Evidence By Hodler, Roland; Valsecchi, Michele; Vesperoni, Alberto
  8. Ethnic Diversity and Growth: Revisiting the Evidence By José García-Montalvo; Marta Reynal-Querol
  9. The Long-lasting Shadow of the Allied Occupation of Austria on its Spatial Equilibrium By Eder, Christoph; Halla, Martin
  10. On regional integration, fiscal income, and GDP per capita By Yutao Han; Zhen Song

  1. By: Matsuyama, Kiminori
    Abstract: This paper proposes a theoretical framework, which allows us to study the effects of geographical factors on the distribution of industries across many regions. The geographical feature of each region is summarized by a proximity matrix, whose elements measure the closeness between every pair of regions and depend on the parameters representing the transport and other costs of using a variety of trade routes. A change in these costs of trade affects the distribution of industries by amplifying the geographical advantages and disadvantages of regions. Through a series of examples, we demonstrate how this framework can be used not only to examine the effects of an improvement in transport infrastructure, but also to address some problems from economic history, regional economic integration, and the north-south division, and discuss some geopolitical issues.
    Keywords: A Multi-region Model of Costly Trade in Differentiated Goods; Convergence versus Divergence; Geographical Advantages and Disadvantages; Home Market Effect; monopolistic competition; Proximity Matrix; Regional Economic Integration; Trade Routes; Uneven Development
    JEL: F12 F15 O11 R12
    Date: 2017–10
  2. By: Rodríguez-Pose, Andrés; von Berlepsch, Viola
    Abstract: Does population diversity matter for economic development in the long-run? Does the impact of diversity differ over time? This paper traces the short-, medium-, and long-term economic impact of population diversity resulting from the big migration waves of the late 19th and early 20th centuries to the United States (US). Using census data from 1880, 1900, and 1910, the settlement pattern of migrants across the counties of the 48 US continental states is tracked in order to construct measures of population fractionalisation and polarisation at county level. Factors which may have influenced both the individual settlement decision at the time of migration as well as county-level economic development in recent years are controlled for. The results of the analysis show that high levels of population fractionalisation have a strong and positive influence on economic development in the short-, medium-, and long-run. High levels of polarisation, by contrast, undermine development. Despite a stronger effect on income levels in the first 30 years, these relationships are found to be extremely long-lasting: counties with a more heterogeneous population composition over 130 years ago are significantly richer today, whereas counties that were strongly polarised at the time of the migration waves have endured persistent negative economic effects.
    Keywords: Counties; diversity; economic development; Fractionalisation; Polarisation; USA
    JEL: J15 J61 O43 R11 R23
    Date: 2017–10
  3. By: Jahn, Vera
    Abstract: German politicians frequently emphasize the importance of Mittelstand firms for the economy, thereby particularly referring to their enormous engagement in training apprentices. However, there is yet almost no empirical evidence on the question whether Mittelstand firms are in fact excessively active in training apprentices. We study whether the relative importance of owner-managed small and medium sized enterprises has an effect on firms' apprenticeship activity on the county level.
    JEL: C21 D23 I21
    Date: 2017
  4. By: Hinz, Julian
    Abstract: I compute distances used in the gravity model of international trade that improve the existing measures along multiple lines and help remedy the border puzzle by up to 50%. I derive a trade cost aggregation that is agnostic to the underlying gravity framework while taking into account the economic geography of countries. Using this method I compute bilateral and internal country distances, making use of nightlight satellite imagery for information on the economic geography of countries.
    JEL: F10 F14
    Date: 2017
  5. By: Emilie Arnoult; Florent Sari
    Date: 2017
  6. By: Serafinelli, Michel; Tabellini, Guido
    Abstract: Creativity is often highly concentrated in time and space, and across different domains. What explains the formation and decay of clusters of creativity? In this paper we match data on thousands of notable individuals born in Europe between the XIth and the XIXth century with historical data on city institutions and population. After documenting several stylized facts, we show that the formation of creative clusters is not preceded by increases in city size. Instead, the emergence of city institutions protecting economic and political freedoms facilitates the attraction and production of creative talent
    Keywords: agglomeration; Gravity; Immigration; Innovation; Political Institutions
    JEL: J61 N13 O10 R10
    Date: 2017–10
  7. By: Hodler, Roland; Valsecchi, Michele; Vesperoni, Alberto
    Abstract: The effects of ethnic geography, i.e., the distribution of ethnic groups across space, on economic, political and social outcomes are not well understood. We develop a novel index of ethnic segregation that takes both ethnic and spatial distances between individuals into account. Importantly, we can decompose this index into indices of spatial dispersion, generalized ethnic fractionalization, and the alignment of spatial and ethnic distances. We use maps of traditional ethnic homelands, historical population density data, and language trees to compute these four indices for more than 150 countries. We apply these indices to study the relation between historical ethnic geography and current economic, political and social outcomes. Among other things, we document that countries with higher historical alignment, i.e., countries where ethnically diverse individuals lived far apart, have higher-quality government, higher incomes and higher levels of trust.
    Keywords: economic development; ethnic diversity; ethnic geography; fractionalization; quality of government; Segregation; trust.
    JEL: C43 D63 O10 Z13
    Date: 2017–10
  8. By: José García-Montalvo; Marta Reynal-Querol
    Abstract: The relationship between ethnic heterogeneity and economic growth is complex. Empirical research working with cross-country data finds a negative, or statistically in- significant, relationship. However, research at the city level usually finds a positive relationship between diversity and wages/productivity. Generally, the trade-off be- tween the economic benefits of diversity and the costs of heterogeneity implies that the relationship between diversity and growth depends on the size of the area used as the unit of observation. In this paper we perform a systematic analysis of the effect of the size of geographical units on the relationship between ethnic diversity and growth. We find a positive relationship for small geographical areas and no effect for large areas and countries. There are potentially different mechanisms that can explain this result depending on the structure of the economy and its level of development. In the case of Africa, we argue that a possible explanation of the positive relationship between diversity and growth is the increase in trade at the boundaries between ethnic groups due to ethnic specialization.
    Date: 2017–10
  9. By: Eder, Christoph; Halla, Martin
    Abstract: After World War II, Austria was divided into four occupation zones for 10 years. We exploit the migration shock out of the Soviet zone to understand why economic activity is distributed unevenly in space. We show that the distorted population distribution has fully persisted until now. More direct measures of economic activity show an even higher concentration in the former non-Soviet zone. This gap in economic activity is growing over time, mainly due to commuting out of the former Soviet zone.
    JEL: R12
    Date: 2017
  10. By: Yutao Han (Department of Economics, University of International Business and Economics); Zhen Song (CEMA, Central University of Finance & Economics)
    Abstract: This paper investigates the economic impacts of regional integration on a small jurisdiction in a dynamic fiscal competition environment. The tradeoffs between the economic benefits and the loss of policy flexibility resulting from integration are analyzed from the perspectives of fiscal revenue and GDP per capita. Our results show that the small jurisdiction's loss of flexibility in policy making can dominate the other effects of integration. Specifically, if the small jurisdiction's efficiency in providing public inputs is originally sufficiently high (low), regional integration always reduces (improves) its net revenue, independently of the extent of efficiency improvement due to integration. However, when the small jurisdiction's efficiency is originally intermediate, the impact on net revenue crucially depends on the magnitude of the efficiency effect. Our analysis also characterizes the tradeoffs resulting from integration between policy flexibility on the one hand and capital mobility and fiscal equalization on the other.
    Keywords: regional integration; policy flexibility; fiscal revenue; differential game
    JEL: R12 H87 C73
    Date: 2017–08

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