nep-geo New Economics Papers
on Economic Geography
Issue of 2017‒11‒26
fourteen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Innovation in Russia: the territorial dimension By Crescenzi, Riccardo; Jaax, Alexander
  2. Revisiting Interregional Wage Differentials: New Evidence from Spain with Matched Employer-Employee Data By Murillo Huertas, Inés P.; Ramos, Raul; Simón, Hipólito
  3. Wage inequality and the Location of Cities By David Jinkins; Farid Farrokhi
  4. New road infrastructure: the effects on firms By Gibbons, Stephen; Lyytikainen, Teemu; Overman, Henry G.; Sanchis-Guarner, Rosa
  5. The impact of highway on population redistribution: The role of land development restrictions By Or Levkovich; Jan Rouwendal; Jos van Ommeren
  6. Urban Population and Amenities: The Neoclassical Model of Location By David Albouy; Bryan Stuart
  7. The compact city in empirical research: A quantitative literature review By Ahfeldt, Gabriel M.; Pietrostefani, Elisabetta
  8. From brawn to brains: manufacturing-KIBS interdependency By Elche,Dioni; Consoli, Davide; Sánchez-Barrioluengo, Mabel
  9. Regional development under socialism: evidence from Yugoslavia By Kukić, Leonard
  10. Geographic Inequality of Economic Well-being among U.S. Cities: Evidence from Micro Panel Data By Choi, Chi-Young; Chudik, Alexander
  11. Transitioning beyond coal: Lessons from the structural renewal of Europe’s old industrial regions By Stephanie Campbell; Lars Coenen
  12. Local economic effects of Brexit By Dhingra, Swati; Machin, Stephen; Overman, Henry G.
  13. Does Segregation Reduce Socio-Spatial Mobility? Evidence from Four European Countries with Different Inequality and Segregation Contexts By Nieuwenhuis, Jaap; Tammaru, Tiit; van Ham, Maarten; Hedman, Lina; Manley, David
  14. Nowcasting the Local Economy: Using Yelp Data to Measure Economic Activity By Edward L. Glaeser; Hyunjin Kim; Michael Luca

  1. By: Crescenzi, Riccardo; Jaax, Alexander
    Abstract: The debate on Russia’s innovation performance has paid little attention to the role of geography. This paper addresses this gap by integrating an evolutionary dimension in an ‘augmented’ regional knowledge production function framework to examine the territorial dynamics of knowledge creation in Russia. The empirical analysis identifies a strong link between regional R&D expenditure and patenting performance. However, R&D appears inadequately connected to regional human capital. Conversely, Multinational Enterprises (MNEs) play a fundamental role as ‘global knowledge pipelines’. The incorporation of historical variables reveals that the Russian case is a striking example of long-term pathdependency in regional patterns of knowledge generation. Endowment with Soviet-founded science cities remains a strong predictor of current patenting. However, current innovation drivers and policies also concur to enhance (or hinder) innovation performance in all regions. The alignment of regional innovation efforts, exposure to localised knowledge flows and injections of ‘foreign’ knowledge channelled by MNEs make path-renewal and pathcreation possible, opening new windows of locational opportunity.
    Keywords: innovation; R&D; evolutionary economic geography; regions; BRICS; Russia
    JEL: O32 O33 R11 R12
    Date: 2017–08–03
  2. By: Murillo Huertas, Inés P. (Universidad de Extremadura); Ramos, Raul (University of Barcelona); Simón, Hipólito (Universidad de Alicante)
    Abstract: This study examines wage differences across Spain's regions along the entire wage distribution based on matched employer-employee microdata from 2006 to 2014. Unlike previous studies, we control for differences in regional purchasing power parities, which are very large in practice. Although many of the raw wage differences observed are explained by differences between regional productive structures and, to a lesser extent, in labour forces, noteworthy regional differences net of composition effects remain after controlling for a broad set of individual and firm characteristics. Unexplained wage differences are generally very similar throughout the wage distribution and are strongly persistent over time, despite significant changes in both economic cycle and labour regulations that occurred in Spain during the examined period. This evidence suggests the presence of common mechanisms in the generation of regional wage differentials that affect the whole labour force and that are strongly persistent over time, which is consistent with a key role of collective bargaining
    Keywords: interregional wage differentials, decomposition methods, matched employer-employee data, wage setting institutions
    JEL: J31 J52
    Date: 2017–10
  3. By: David Jinkins (Copenhagen Business School); Farid Farrokhi (Purdue University)
    Abstract: In cross-sectional American census data, we document that isolated cities tend to have less wage inequality. To explain this correlation and other correlations between population and wages, we build an equilibrium empirical model that incorporates high and low-skill labor, costly trade, and both agglomeration and congestion forces. The model bridges the gap between the spatial inequality literature which abstracts from geography, and the economic geography literature which abstracts from inequality. We find that geographical location explains 9.2% of observed variation in wage inequality across American cities. In counterfactual experiments, we find that reductions in domestic trade costs benefit all American workers and decrease welfare inequality. We also examine the effects on inequality and welfare of both regional and national skill-biased technology shocks. We find that in larger cities wage inequality grows more than welfare inequality.
    Date: 2017
  4. By: Gibbons, Stephen; Lyytikainen, Teemu; Overman, Henry G.; Sanchis-Guarner, Rosa
    Abstract: This paper estimates the impact of new road infrastructure on employment and labour productivity using plant level longitudinal data for Britain. Exposure to transport improvements is measured through changes in accessibility, calculated at a detailed geographical scale from changes in minimum journey times along the road network. These changes are induced by the construction of new road link schemes. We deal with the potential endogeneity of scheme location by identifying the effects of changes in accessibility from variation across small-scale geographical areas close to the scheme. We find substantial positive effects on area level employment and number of plants. In contrast, for existing firms we find negative effects on employment coupled with increases in output per worker and wages. A plausible interpretation is that new transport infrastructure attracts transport intensive firms to an area, but with some cost to employment in existing businesses.
    Keywords: productivity; employment; accessibility; transport
    JEL: R14 J01
    Date: 2017–05
  5. By: Or Levkovich (Department of Spatial Economics, VU University); Jan Rouwendal (Tinbergen Institute); Jos van Ommeren (Tinbergen Institute)
    Abstract: We study the role of land development restrictions for the effects of highway expansion on the spatial distribution of population. We demonstrate that these restrictions strongly interfered with the effects of highways in the Netherlands. Introducing an IV approach to address endogenous interaction variables, our findings show that new highways accelerated population growth in peripheral areas, but had no such effect in central cities and suburban municipalities. We find that due to development restrictions near larger cities, the highway expansion caused a ‘leapfrog’ pattern, in which suburban growth skipped development-restricted areas and expanded into farther located peripheral areas.
    Keywords: highways; development restrictions; population redistribution; suburbanization; instrumental variables; endogenous interaction variables
    JEL: R11 R58 R52
    Date: 2017–11–17
  6. By: David Albouy (University of Illinois and NBER); Bryan Stuart (George Washington University)
    Abstract: We develop a neoclassical general-equilibrium model to explain cross-metro variation in population, density, and land supply. We provide new methods to estimate local traded and non-traded productivities, and elasticities of housing and land supply, using density and land-area data. From wage and housing-cost indices, the model explains half of U.S. density and total population variation, and finds that quality-oflife determines population and density more than employment opportunities (tradeproductivity). Productivity and factor substitution in housing (non-traded) production matter most, but are poor in nicer areas. We show how changing quality-of-life, relaxing land-use regulations, or neutralizing federal taxes could redistribute populations massively
    Keywords: Population, density, quality of life, productivity, amenities, housing supply, land supply, local labor markets
    JEL: R23 R12 R31 H2
    Date: 2017
  7. By: Ahfeldt, Gabriel M.; Pietrostefani, Elisabetta
    Abstract: The ‘compact city’ is one of the most prominent concepts to have emerged in the global urban policy debate, though it is difficult to ascertain to what extent its theorised positive outcomes can be substantiated by evidence. Our review of the theoretical literature identifies three main compact city characteristics that have effects on 15 categories of outcomes: economic density, morphological density and mixed land use. The scope of our quantitative evidence-review comprises all theoretically relevant combinations of characteristics and outcomes. We review 321 empirical analyses in 189 studies for which we encode the qualitative result along with a range of study characteristics. In line with theoretical expectations, 69% of the included analyses find normatively positive effects associated with compact urban form, although the mean finding is negative for almost half of the combinations of outcomes and characteristics.
    Keywords: compact; city; density; meta-analysis; sustainability; urban
    JEL: Q15
    Date: 2017–06
  8. By: Elche,Dioni; Consoli, Davide; Sánchez-Barrioluengo, Mabel
    Abstract: This paper analyses the interdependency between manufacturing and KIBS by focussing on two questions: which manufacturing industries are complementary with KIBS development? And, do cross-sectoral interdependencies exhibit geographical heterogeneity? We elaborate an empirical analysis of employment data of 279 municipalities in Spain over the period 1981-2011. Our first finding is that the typology of manufacturing activities that have positive employment effect ranges between two opposite poles: either well-established (viz. supplier-dominated) or emergent (viz. science based) industries. Further, and coherent with prior literature, we find that the overall job multiplier effect of manufacturing on KIBS is most prominent in areas with denser agglomeration.
    Keywords: Knowledge Intensive Business Services, Manufacturing; Employment, Job Multiplier
    Date: 2017–11–14
  9. By: Kukić, Leonard
    Abstract: This paper analyses the patterns of regional growth and development in Yugoslavia, under the most decentralised socialist system that ever existed. My analysis reveals that despite government efforts to the contrary, socialist economic development in Yugoslavia resulted in divergence rather than in convergence between the constituent regions. I find that regional income divergence was caused by the failure of the less developed regions to converge towards the employment rates and total factor productivities of the more developed regions. I interpret these failures as symptoms of a single underlying problem: a capital intensity bias inherent to the governing objective of labour-managed firms. Socialist Yugoslavia moved from having one central plan, to having many mutually competitive plans. While on aggregate this may have created a net positive productivity outcome compared to other socialist economies, it created unique distortions. The decentralisation policies were implemented with the aim of enhancing regional cohesion and social stability. They led, however, to exactly opposite outcomes
    Keywords: economic growth; regional development; economic history: Yugoslavia; socialism
    JEL: N0
    Date: 2017–10
  10. By: Choi, Chi-Young (University of Texas at Arlington); Chudik, Alexander (Federal Reserve Bank of Dallas)
    Abstract: We analyze the geographic inequality of economic well-being among U.S. cities by utilizing a novel measure of quantity based product-level economic well-being, i.e., the number of goods and services that can be purchased by consumers with an average city wage. We find a considerable cross-city dispersion in the economic well-being and the geographic dispersion has been on the steady rise since the mid-1990s for most goods and services under study. Strong geographic correlations exist in the local economic well-being and our empirical analysis based on a Global VAR (GVAR) model suggests that national shocks are an important source behind it. On average, about 30-35% of the variance of local well-being is explained by common national shocks, but the impact of common national shocks varies considerably across products, albeit to a lesser extent across cities. Nationwide unemployment shock, for example, has a stronger effect in the products whose prices are adjusted more frequently and in the cities that have a larger fraction of high-skill workers. Taken together, our results indicate that the geographic inequality of economic well-being observed in the U.S. has proceeded over time mainly through the products with more flexible price adjustments and in the cities with higher concentration of skilled workers.
    JEL: E21 E31 R12 R31
    Date: 2017–11–01
  11. By: Stephanie Campbell (Melbourne Sustainable Society Institute, University of Melbourne); Lars Coenen (Melbourne Sustainable Society Institute, University of Melbourne)
    Abstract: It is often assumed that a transition to a low-carbon future will have highly disruptive and potentially devastating effects on coal regions and their communities. However, evidence from the experience of industrial decline and attempted renewal in Europe’s old industrial regions demonstrates that successful regional transition is—while not inevitable—indeed possible. Fundamental transformation of existing industrial, institutional, social and technological structures is not an easy nor straightforward process but fraught with the challenges of creative destruction: while new industrial activities and structures emerge, existing ones are broken down. Drawing on the literature of regional resilience and innovation, the paper offers lessons, insights and cautionary warnings from the experience of renewal initiatives in Europe’s old industrial regions and illustrates the ways in which some of the seeds for a ‘just’ regional transitions to zero-carbon economies may, in fact, lie in a careful understanding of the potential to build on the specific historical context of the regions industrial development and capabilities.
    Keywords: coal transition, old industrial regions, regional development, regional innovation
    JEL: O38 R11
    Date: 2017–11
  12. By: Dhingra, Swati; Machin, Stephen; Overman, Henry G.
    Abstract: This paper studies local economic impacts of the increases in trade barriers associated with Brexit. Predictions of the local impact of Brexit are presented under two different scenarios, soft and hard Brexit, which are developed from a structural trade model. Average effects are predicted to be negative under both scenarios, and to be more negative under hard Brexit. The spatial variation in negative shocks across areas is higher in the latter case as some local areas are particularly specialised in sectors that are predicted to be badly hit by hard Brexit. Areas in the South of England, and urban areas, are harder hit by Brexit under both scenarios. Again, this pattern is explained by sector specialisation. Finally, the areas that were most likely to vote remain are those that are predicted to be most negatively impacted by Brexit.
    Keywords: Brexit; EU and UK; local economic impacts; trade models
    JEL: J1
    Date: 2017–10–31
  13. By: Nieuwenhuis, Jaap (Delft University of Technology); Tammaru, Tiit (University of Tartu); van Ham, Maarten (Delft University of Technology); Hedman, Lina (Uppsala University); Manley, David (University of Bristol)
    Abstract: The neighbourhoods in which people live reflects their social class and preferences, so studying socio-spatial mobility between neighbourhoods gives insight in the openness of spatial class structures of societies and in the ability of people to leave disadvantaged neighbourhoods. We study the extent to which people move between different types of neighbourhoods by socio-economic status in different inequality and segregation contexts in four European countries: Sweden, the Netherlands, the United Kingdom, and Estonia. The study is based on population registers and census data for the 2001–2011 period. For the UK, which has long had high levels of social inequalities and high levels of socio-economic segregation, we find that levels of mobility between neighbourhood types are low and opportunities to move to more socio-economically advantaged neighbourhoods are modest. In Estonia, which used to be one or the most equal and least segregated countries in Europe and now is one of the most liberal and market oriented countries, we find high levels of mobility, but these reproduce segregation patterns and it is difficult to move to better neighbourhoods for those in the most deprived neighbourhoods. In the Netherlands and Sweden, where social inequalities are the smallest, it is easiest to move from the most deprived to less deprived neighbourhoods. To conclusion, the combination of high levels of social inequalities and high levels of spatial segregation tend to lead to a vicious circle of segregation for low income groups, where it is difficult to undertake both upward social mobility and upward spatial mobility.
    Keywords: social mobility, spatial mobility, disadvantaged neighbourhoods, segregation, inequality, international comparison
    JEL: I32 J61 J62 R23
    Date: 2017–10
  14. By: Edward L. Glaeser; Hyunjin Kim; Michael Luca
    Abstract: Can new data sources from online platforms help to measure local economic activity? Government datasets from agencies such as the U.S. Census Bureau provide the standard measures of local economic activity at the local level. However, these statistics typically appear only after multi-year lags, and the public-facing versions are aggregated to the county or ZIP code level. In contrast, crowdsourced data from online platforms such as Yelp are often contemporaneous and geographically finer than official government statistics. In this paper, we present evidence that Yelp data can complement government surveys by measuring economic activity in close to real time, at a granular level, and at almost any geographic scale. Changes in the number of businesses and restaurants reviewed on Yelp can predict changes in the number of overall establishments and restaurants in County Business Patterns. An algorithm using contemporaneous and lagged Yelp data can explain 29.2 percent of the residual variance after accounting for lagged CBP data, in a testing sample not used to generate the algorithm. The algorithm is more accurate for denser, wealthier, and more educated ZIP codes.
    JEL: E17 O33 R11
    Date: 2017–11

This nep-geo issue is ©2017 by Andreas Koch. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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