nep-geo New Economics Papers
on Economic Geography
Issue of 2017‒11‒12
eleven papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. A Long-Run Perspective on the Spatial Concentration of Manufacturing Industries in the United States By Nicholas Crafts; Alexander Klein
  2. What Drives Spatial Clusters of Entrepreneurship in China? Evidence from Economic Census Data By Zheng, Liang; Zhao, Zhong
  3. Gravity, Distance, and International Trade By Scott L. Baier; Amanda Kerr; Yoto V. Yotov
  4. Local labor markets and the persistence of population shocks By Braun, Sebastian; Kramer, Anica; Kvasnicka, Michael
  5. The Shadow of Cities: Size, Location and the Spatial Distribution of Population in Spain By Beltràn Tapia, F.; Díez-Minguela, A.; Martinez-Galarraga, J.
  6. Simultaneous Spatial Panel Data Models with Common Shocks By Lu, Lina
  7. Do Border Effects Alter Regional Development: Evidence from China By Partridge, Mark D.; Yang, Benjian; Chen, Anping
  8. Spatial-Ethnic Inequalities: The Role of Location in the Estimation of Ethnic Wage Differentials By Longhi, Simonetta
  9. Colonial Legacies: Shaping African Cities By Neeraj Baruah; J. Vernon Henderson; Cong Peng
  10. Nighttime Lights as a Proxy for Human Development at the Local Level By Anna Bruederle; Roland Hodler
  11. Bankruptcy Spillovers By Bernstein, Shai; Colonnelli, Emanuele; Giroud, Xavier; Iverson, Benjamin

  1. By: Nicholas Crafts; Alexander Klein
    Abstract: We construct spatially-weighted indices of the geographic concentration of U.S. manufacturing industries during the period 1880 to 1997 using data from the Census of Manufactures and Bureau of Labor Statistics. Several important new results emerge from this exercise. First, we find that average spatial concentration was much lower in the late 20th - than in the late 19th - century and that this was the outcome of a continuing reduction over time. Second, the persistent tendency to greater spatial dispersion was characteristic of most manufacturing industries. Third, even so, economically and statistically significant spatial concentration was pervasive throughout this period.
    Keywords: manufacturing belt; spatial concentration; transport costs
    JEL: N62 N92 R12
    Date: 2017–08
  2. By: Zheng, Liang (Central University of Finance and Economics); Zhao, Zhong (Renmin University of China)
    Abstract: Since Chinese government initiated economic reform in the late 1970s, entrepreneurship and private sectors have emerged gradually and played an increasingly important role in promoting economic growth. However, entrepreneurship is distributed unevenly in China. Using micro data from 2008 economic census and 2005 population census, this paper explains spatial clusters of entrepreneurship for both manufacturing and services. For both sectors, entrepreneurship (measured by new private firms) tends to emerge in places with more relevant upstream and downstream firms. Moreover, Chinitz's (1961) theories are also supported for manufacturing: small upstream and downstream firms seem to be more important for manufacturing entrepreneurship. For both sectors, entrepreneurship is positively related to city size, the share of young adults and the elderly population, and foreign direct investment. More migrants are also found to promote service entrepreneurship. Our paper is the first to consider both manufacturing and service entrepreneurship in China and should be of interest to both local and national policymakers who plan to encourage entrepreneurship.
    Keywords: new firm formation, entrepreneurship, Marshallian effect, Chinitz effect, China
    JEL: L26 L60 L80 R10 R12
    Date: 2017–10
  3. By: Scott L. Baier; Amanda Kerr; Yoto V. Yotov
    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 F43 O40
    Date: 2017
  4. By: Braun, Sebastian; Kramer, Anica; Kvasnicka, Michael
    Abstract: This paper studies the persistence of a large, unexpected, and regionally very unevenly distributed population shock, the inflow of eight million ethnic Germans from Eastern Europe to West Germany after World War II. Using detailed census data from 1939 to 1970, we show that the shock had a persistent effect on the distribution of population within local labor markets, but only a temporary effect on the distribution between labor markets. These results suggest that locational fundamentals determine population patterns across but not within local labor markets, and they can help to explain why previous studies on the persistence of population shocks reached such different conclusions.
    Keywords: population shock,locational fundamentals,agglomeration economies,regional migration,postwar Germany
    JEL: J61 R12 R23 N34
    Date: 2017
  5. By: Beltràn Tapia, F.; Díez-Minguela, A.; Martinez-Galarraga, J.
    Abstract: Using a large data set on the population of Spanish municipalities between 1877 and 2001, this paper analyses how their initial size and the presence of neighbouring urban locations influence subsequent population growth and how these links have evolved over time. Our results show that initial size is negatively related to population growth, except in the 1960s and 1970s when this relationship becomes positive. Likewise, the presence of neighbouring urban locations limited local population growth in the late 19th century, a negative effect that persisted, but at a diminishing rate, until the second half of the 20th century. The influence of nearby cities became increasingly positive from then onwards, and especially so during the 1970s.
    Keywords: Agglomeration economies; spatial interactions, regional growth, Spain
    JEL: N93 N94 O18 R11 R12
    Date: 2017–11–01
  6. By: Lu, Lina (Federal Reserve Bank of Boston)
    Abstract: I consider a simultaneous spatial panel data model, jointly modeling three effects: simultaneous effects, spatial effects and common shock effects. This joint modeling and consideration of cross-sectional heteroskedasticity result in a large number of incidental parameters. I propose two estimation approaches, a quasi-maximum likelihood (QML) method and an iterative generalized principal components (IGPC) method. I develop full inferential theories for the estimation approaches and study the trade-off between the model specifications and their respective asymptotic properties. I further investigate the finite sample performance of both methods using Monte Carlo simulations. I find that both methods perform well and that the simulation results corroborate the inferential theories. Some extensions of the model are considered. Finally, I apply the model to analyze the relationship between trade and GDP using a panel data over time and across countries.
    Keywords: Panel data model; Spatial model; Simultaneous equations system; Common shocks; Simultaneous effects; Incidental parameters; Maximum likelihood estimation; Principal components; High dimensionality; Inferential theory
    JEL: C13 C31 C33 C38 C51
    Date: 2017–08–09
  7. By: Partridge, Mark D.; Yang, Benjian; Chen, Anping
    Abstract: Market access/potential are main explanations for spatial variation in economic activity. Past research has recently used the quasi-natural experiment of the imposition and removal of Iron Curtain to assess how changes in market access influenced economic outcomes. Rather, we focus on key quantity effects of market access by tracking population changes induced by the creation of a subnational border. We exploit a quasi-natural experiment in China and use a difference-in-difference identification strategy to estimate the effects of introducing a new border when Sichuan province was split into Chongqing and Sichuan in 1997. We find that the new border has negative population effects on Sichuan counties located near the new border. These counties experienced a substantial decline in population growth after 1997 compared to Sichuan counties farther from the border, with the negative effects mainly confined to a band within 50-100 kilometers to the new border. Further investigation with falsification tests found that such border effects are unique to the new border region and are not related to the new Sichuan border region being more rural or to being on any provincial border.
    Keywords: border effects; population changes; difference in difference; market access; agglomeration; China
    JEL: R10
    Date: 2017–10
  8. By: Longhi, Simonetta (University of Reading)
    Abstract: Analyses of ethnic and racial wage differentials neglect the fact that minorities cluster in urban and in more deprived areas. This paper estimates ethnic wage differentials by comparing minorities to the majority in the same local labour market and therefore facing similar socio-economic conditions. Location is important: in the UK ethnic wage differentials and their variation across areas are partly explained by job characteristics and especially occupation. Since minorities in some areas are worse off compared to minorities in other areas, there may be scope for policy to incentivise mobility of specific groups.
    Keywords: race, ethnicity, wage differentials, spatial location, unequal distribution, multilevel models
    JEL: J31 J71 R10 R23
    Date: 2017–10
  9. By: Neeraj Baruah; J. Vernon Henderson; Cong Peng
    Abstract: Differential institutions imposed during colonial rule continue to affect the spatial structure and urban interactions in African cities. Based on a sample of 318 cities across 28 countries using satellite data on built cover over time, Anglophone origin cities sprawl compared to Francophone ones. Anglophone cities have less intense land use and more irregular layout in the older colonial portions of cities, and more leapfrog development at the extensive margin. Results are impervious to a border experiment, many robustness tests, measures of sprawl, and sub-samples. Why would colonial origins matter? The British operated under indirect rule and a dual mandate within cities, allowing colonial and native sections to develop without an overall plan and coordination. In contrast, integrated city planning and land allocation mechanisms were a feature of French colonial rule, which was inclined to direct rule. The results also have public policy relevance. From the Demographic and Health Survey, similar households which are located in areas of the city with more leapfrog development have poorer connections to piped water, electricity, and landlines, presumably because of higher costs of providing infrastructure with urban sprawl.
    Keywords: colonialism, persistence, Africa, sprawl, urban form, urban planning, leapfrog
    JEL: H7 N97 O1 O43 P48 R5
    Date: 2017–11
  10. By: Anna Bruederle; Roland Hodler
    Abstract: Nighttime lights are increasingly used by social scientists as a proxy for economic activity and economic development in subnational spatial units. However, so far, our understanding of what nighttime lights capture is limited. We construct local indicators of household wealth, education and health from geo-coded Demographic and Health Surveys (DHS) for 29 African countries. We show that nighttime lights are positively associated with these indicators across DHS cluster locations as well as across grid cells of roughly 50 x 50 km. We conclude that nighttime lights are a good proxy for human development at the local level.
    Keywords: nighttime lights, local development, Africa
    JEL: I15 I25 I32 O15 O55
    Date: 2017
  11. By: Bernstein, Shai (Stanford University); Colonnelli, Emanuele (Stanford University); Giroud, Xavier (MIT); Iverson, Benjamin (Northwestern University)
    Abstract: How do different bankruptcy approaches affect the local economy? Using U.S. Census microdata, we explore the spillover effects of reorganization and liquidation on geographically proximate firms. We exploit the random assignment of bankruptcy judges as a source of exogenous variation in the probability of liquidation. We find that employment declines substantially in the immediate neighborhood of the liquidated establishments, relative to reorganized establishments. The spillover effects are highly localized and concentrate in non-tradable and service sectors, consistent with a reduction in local consumer traffic and a decline in knowledge spillovers between firms. The evidence highlights the externalities that bankruptcy design can impose on non-bankrupt firms.
    Date: 2017–05

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