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

  1. Geographical Scale, Industrial Diversity and Regional Economic Stability By Jing Chen
  2. Location of R&D abroad. An analysis on Global Cities By Davide Castellani; Katiuscia Lavoratori
  3. The Changing Geography of Innovation and the Role of Multinational Enterprises By Davide Castellani
  4. Regional Innovator Networks - A Review and an Application with R By Holger Graf
  5. Urban Interactions By Kim, Jun Sung; Patacchini, Eleonora; Picard, Pierre M.; Zenou, Yves
  6. The revenge of the places that don't matter (and what to do about it) By Rodríguez-Pose, Andrés
  7. Cross-faculty proximity and academic entrepreneurship: The role of business schools By Maximilian Goethner; Michael Wyrwich
  8. Local labor market size and qualification mismatch By Berlingieri, Francesco
  9. Resource allocation and productivity across provinces in China By Peng Bin; Xiaolan Chen; Andrea Fracasso; Chiara Tomasi
  10. Local income tax competition with progressive taxes and a fiscal equalization scheme By Florian Kuhlmey
  11. Income vs. property tax competition: A normative comparison By Florian Kuhlmey

  1. By: Jing Chen (Regional Research Institute, West Virginia University)
    Abstract: The empirical relationship between economic diversity and economic stability varies when it is measured at different geographical scales. This paper evaluates the role of geographical scales in assessing this diversity-stability relationship among counties, states, Economic Areas (EAs), metropolitan counties and metropolitan statistical areas (MSAs) in the contiguous U.S. When choosing geographical units to analyze regional economic structure, it is necessary that the geographical units be large enough in population and employment to quantify effectively the regional economic structure. In addition, this paper proposes that geographical units also should be functionally aggregated regions as they better represent spatial interactions than formal regions do, and they consider the possible temporal variations in the boundaries of regional economic structures.
    Keywords: Geographical Scale, Industrial Diversity, Economic Stability, Spatial Interactions
    JEL: C40 R11 O11
    Date: 2017–12
  2. By: Davide Castellani (Henley Business School, University of Reading); Katiuscia Lavoratori
    Abstract: This paper investigates the determinants of the location of MNEs’ overseas R&D activities, by focusing on two major drivers. On the one hand, external location factors lead the firm to separate its activities along the value chain and geographically disperse these activities in different locations. On the other hand, the R&D location choice may be driven by the existence of internal (within-firm) linkages that motivate firms to locate their value chain activities in the same location (co-location within-firm). Using data from the fDi Markets database, the study examines 2,580 location decisions of new R&D greenfield investments made by MNEs in 110 global cities worldwide, over the period 2003-2014. Results from Conditional and Mixed Logit econometric models reveal that both external and internal factors matter. Findings confirm the strong role of external agglomeration economies, but also suggest that previous R&D and production activities of the same MNE increase the probability to locate R&D in a given global city.
    Keywords: location of international R&D, empirical methodology
    JEL: F23 O30 R30
    Date: 2017–10
  3. By: Davide Castellani (Henley Business School, University of Reading)
    Abstract: This paper provides descriptive evidence of the changing geography of inventive activity and the role of MNEs international R&D activities, with quite an extensive geographical coverage. Results highlight that ‘local buzz’ is crucial for the development of knowledge in local economies, and it leads to persistence in innovative activities. However, ‘global pipelines’ are also becoming a crucial element for the successful development of local knowledge. In particular, we first find that the number of regions involved in patenting has increased threefold since the 1980s. Second, despite this increase in the number of regions patenting, 70% of inventions come from the top 100 regions. Third, although the hierarchy of the top patenting regions is not immobile, the propensity to patent is quite dependent on previous innovation. Fourth, international collaboration in patenting has been steadily on the rise over the last three decades. Fifth, international R&D investments of MNEs are indeed also very concentrated in a few locations, which can also be quite distant from the MNEs headquarters’ location.
    Keywords: geography of innovation, MNEs, regions, local buzz, global pipelines
    JEL: F23 R11 O33
    Date: 2017–02
  4. By: Holger Graf (FSU Jena)
    Abstract: The article serves as an introduction to the empirical analysis of innovation or knowledge networks based on patent data with a particular focus on regional networks. I provide a review of the literature of innovation networks and how it connects to systemic approaches within the field of innovation studies. The SNA methodology is introduced by performing a comparative regional network study based on the publicly available OECD patent databases.
    Keywords: Regional Innovation, Network Analysis, Patent Data
    JEL: L14 O31 R11
    Date: 2017–11–08
  5. By: Kim, Jun Sung (Monash University); Patacchini, Eleonora (Cornell University, USA); Picard, Pierre M. (CREA, University of Luxembourg); Zenou, Yves (Monash University, Australia)
    Abstract: This paper studies social-tie formation when individuals care about the geographical location of other individuals. In our model, the intensity of social interactions can be chosen at the same time as friends. We characterize the equilibrium in terms of both social interactions and social capital (the value of social interactions offered by each agent) for a general distribution of individuals in the urban geographical space. We show that greater geographical dispersion decreases the incentives to socially interact. We also show that the equilibrium frequency of interactions is lower than the efficient one. Using a unique geo-coded dataset of friendship networks among adolescents in the United States, we estimate the model and validate that agents interact less than the social first best optimum. Our policy analysis suggests that, given the same cost, subsidizing social interactions yields a higher total welfare than subsidizing transportation costs.
    Keywords: Urban economics; Social interactions; Social capital; Policies
    JEL: R10 R23 Z13
    Date: 2017–11–28
  6. By: Rodríguez-Pose, Andrés
    Abstract: Persistent poverty, economic decay, and lack of opportunities are at the root of considerable discontent in declining and lagging-behind areas the world over. Poor development prospects and an increasing belief that these places have 'no future' – as economic dynamism has been posited to be increasingly dependent on agglomeration economies – have led many of these so-called 'places that don't matter' to revolt against the status quo. The revolt has come via an unexpected source: the ballot-box in a wave of political populism with strong territorial, rather than social foundations. I will argue that the populist wave is challenging the sources of existing well-being in both the less-dynamic and the more prosperous areas and that better, rather than more, place-sensitive territorial development policies are needed in order to find a solution to the problem. Place-sensitive development policies need, however, to stay clear of the welfare, income-support, and big investment projects of past development strategies if they are to be successful and focus on tapping into untapped potential and on providing opportunities to those people living in the places that 'don't matter'.
    Keywords: cities; economic development; place-sensitive policies; populism; regions; territorial inequality
    JEL: O18 R11 R12
    Date: 2017–11
  7. By: Maximilian Goethner (Friedrich Schiller University Jena, School of Economics and Business Administration); Michael Wyrwich (Friedrich Schiller University Jena, School of Economics and Business Administration)
    Abstract: Over the past decades, entrepreneurial activity has started to be considered a third mission of higher education institutions. Our study examines the extent to which entrepreneurship at universities is driven by spatial proximity between university faculties. To this end, we use a new dataset that links information on business idea generation by faculties of German universities between 2007 and 2014 with comprehensive data on structural characteristics of these universities and faculties (e.g., number of academic staff, students, industry funding). Our analysis shows that the emergence of entrepreneurial ideas in natural sciences is positively affected by proximity to business schools. This pattern suggests the presence of knowledge flows between university faculties as an important source of science-based and technology-oriented business ideas.
    Keywords: Academic entrepreneurship, Knowledge Spillover, Spatial Proximity, Entrepreneurial Human Capital
    JEL: D24 L26 M13 O31 O32
    Date: 2017–12–01
  8. By: Berlingieri, Francesco
    Abstract: This paper investigates the effect of the size of the local labor market on skill mismatch. Using survey data for Germany, I find that workers in large cities are both less likely to be overqualified for their job and to work in a different field than the one they are trained for. Different empirical strategies are employed to account for the potential sorting of talented workers into more urbanized areas. Results on individuals never moving from the place of childhood and fixed-effects estimates obtaining identification through regional migrants suggest that sorting does not fully explain the existing differences in qualification mismatch across areas. This provides evidence of the existence of agglomeration economies through better matches. However, lower qualification mismatch in larger cities is found to explain only a small part of the urban wage premium.
    Keywords: agglomeration,labor matching,qualification mismatch,urban wage
    JEL: I21 J24 J31 R23
    Date: 2017
  9. By: Peng Bin; Xiaolan Chen; Andrea Fracasso; Chiara Tomasi
    Abstract: The rapid economic development in China has been characterized by levels of income and productivity very heterogeneous across local areas. This work investigates a previously unexplored aspect of such heterogeneity by assessing the degree of within-industry allocative e ciency across provinces in China over the period 1998-2007. Us- ing firm-level data from the surveys conducted by the National Bureau of Statistics on the Chinese manufacturing firms, we measure the degree of resource misallocation by computing the within-industry covariance between size and productivity at the provincial level. The results suggest that within-industry allocative e ciency varies considerably across local areas and that some place-based factors strongly influence resources mobility. Our work sheds some light on the mechanisms at play in the dis- tribution of resources in China and it contributes to the literature investigating the degree of allocative effciency.
    Keywords: Allocative effciency, Resource allocation, Regional disparities, China
    JEL: D24 L25 O47 F41
    Date: 2017
  10. By: Florian Kuhlmey (University of Basel)
    Abstract: This paper develops a model of local income tax competition with a progressive tax scheme and a built-in scal equalization scheme. Both aspects are central to policy makers: The progressivity for equity reasons, and the scal equalization to prevent a race to the bottom and to limit the degree of segregation of households according to income. The model is calibrated to the metropolitan area of Zurich (Switzerland), and policy evaluations reveal that a progressive tax scheme as the basis for local tax competition causes strong segregating forces that can only to some extent be compensated by the scal equalization scheme.
    Keywords: Tax competition; income taxation; fiscal equalization; progressive taxation; segregation.
    JEL: H3 H7 R1 R2
    Date: 2017
  11. By: Florian Kuhlmey (University of Basel)
    Abstract: Income and property taxation are among the most prevalent policy instruments to nance local expenditure in countries with a high degree of decentralization. However, little is known about their relative eciency and redistributive properties. This paper compares both tax instruments within the same framework and investigates their relative attractiveness to nance local expenditure. It further allows for inter-municipal spillovers and rivalry in the consumption of the publicly provided good. The analytical model identi es the di erent ineciencies in both tax regimes which include intra- and inter-municipal free-riding. In a numerical illustration, the model is solved for the resulting equilibria. This allows to quantify the gross welfare loss from decentralization and also reveals a decomposition of the welfare loss into its components.
    Keywords: Tax competition; normative analysis; income taxation; property taxation; segregation; decentralization; welfare decomposition.
    JEL: H3 H7 R1 R2
    Date: 2017

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