nep-geo New Economics Papers
on Economic Geography
Issue of 2018‒01‒08
fourteen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Highways, Market Access, and Spatial Sorting By Stephan Fretz; Raphael Parchet; Frédéric Robert-Nicoud
  2. On the Optimal Design of Place-Based Policies: A Structural Evaluation of EU Regional Transfers By Yashar Blouri; Maximilian von Ehrlich
  3. Local Border Reforms and Economic Activity By Peter H. Egger; Marko Köthenbürger; Gabriel Loumeau
  4. Cluster Dynamics: Learning from Competitiveness Cluster Policy. The Case of 'Secure Communicating Solutions' in the French Provence-Alpes-Côte d'Azur Region By Christian Longhi
  5. The Paper Trail of Knowledge Spillovers: Evidence from Patent Interferences By Ganguli, Ina; Lin, Jeffrey; reynolds, nicholas
  6. Linguistic distance, networks and migrants' regional location choice By Bredtmann, Julia; Nowotny, Klaus; Otten, Sebastian
  7. Cohesion Policy Incentives for Collaborative Industrial Research. The Evaluation of a Smart Specialisation Forerunner Programme By Riccardo Crescenzi; Guido de Blasio; Mara Giua
  8. The Economic Effects of Density: A Synthesis By Gabriel Ahlfeldt; Elisabetta Pietrostefani
  9. Maximizing the Collective Learning Effects in Regional Economic Development By Jian Gao
  10. Self-employment and Okun’s Law relationship: the Spanish case By Porras, María Sylvina; Martín-Román, Ángel L.
  11. When genesis shapes cluster life cycle? Applying mixed method on a French cluster case study By Bastien Bernela; Marie Ferru; Marc-Hubert Depret
  12. Inequality in Brazil: A Regional Perspective By Carlos Góes; Izabela Karpowicz
  13. Temporary agency employment in Germany: A strategic "buffer" for firms and regions in the crisis? By Neumann, Uwe
  14. The diffusion of economic activity across space: a new approach By Carmen Camacho; Agustín Pérez-Barahona

  1. By: Stephan Fretz; Raphael Parchet; Frédéric Robert-Nicoud
    Abstract: We design a spatial model featuring workers embodied with heterogeneous skills. In equilibrium, locations with improved market access become relatively more attractive to the high-skilled, high-income earners. We then empirically analyze the effects of the construction of the Swiss highway network between 1960 and 2010 on the distribution of income at the local level, as well as on employment and commuting by education level. We find that the advent of a new highway access within 10km led to a long-term 19%-increase of the share of high-income taxpayers and a 6%-decrease of the share of low-income taxpayers. Results are similar for employment data decomposed by education level, as well as for in- and out-commuters. Highways also contributed to job and residential urban sprawl.
    Keywords: transportation, highway, market access, income sorting
    JEL: D31 O18 H54 R11 R23
    Date: 2017
  2. By: Yashar Blouri; Maximilian von Ehrlich
    Abstract: We quantify general equilibrium effects of place-based policies in a multi-region framework with mobility, trade and agglomeration economies. Using detailed data on EU transfers, we infer the local effects of different transfer types on productivity, income and transportation cost. Based on these estimates and the general equilibrium model we derive the spatial distribution of economic activity and the resulting aggregate welfare effects if (i) no transfers were paid and taxes set to zero, (ii) transfers were distributed uniformly, (iii) transfers were welfare-optimally distributed. Characterizing the optimal distributions, we reveal complementarities between transfer types and between transfers and local endowments.
    Keywords: economic geography, place-based policies, structural estimation subsidies, public investments, European structural funds
    JEL: R10 R50 F10 F20 H20
    Date: 2017
  3. By: Peter H. Egger; Marko Köthenbürger; Gabriel Loumeau
    Abstract: In this paper, we study how local border reforms affect economic activity. To do so, we make use of large-scale municipal merger reforms in Germany to assess the effect of local border changes on the distribution of activity in space, an issue that has not been addressed in existing literature. To allow for a comparison of economic activity within unique geographical units over time, we use geo-coded light data as well as local land-use data. Adopting a difference-in-differences approach, we find evidence that municipalities absorbing their merger partners and hosting the new administrative center experience a significant increase in local activity, while the municipalities that are being absorbed and are losing the administrative center experience a decrease in such activity. The difference between the gains in activity from absorbing municipalities and the losses from absorbed ones appears positive. These hitherto undocumented results point to the importance of distance to the administrative center as a determinant of the spatial distribution of economic activity.
    Keywords: border effects, centripetal forces, nightlight data, administrative center, municipal mergers
    JEL: H70 R11 R12
    Date: 2017
  4. By: Christian Longhi (Université Côte d'Azur; CNRS, GREDEG)
    Abstract: The paper aims to identify the forms and dynamics of the organizational structures of high-tech clusters overtime. Since Markusen (1996), it is well acknowledged that diversity is an emergent property of clusters, but the interactions between local and non-local actors of the clusters are difficult to trace because of lack of relevant data. The cluster policies developed to fix the network failures between the heterogeneous actors – large and small firms, universities, research institutes – of the current processes of innovation provide new information opportunities. In France, Competitiveness Clusters work as a "factories of project"; the information they produce on collective R&D projects applying for subsidies provides a proxy of local and non-local relations of the clusters. Social network analysis is used to infer the organizational structure of the collective learning networks and trace their dynamics. The case studies considered are Sophia-Antipolis and Rousset, two high tech clusters which belong to the same Competitiveness Cluster, 'Secure Communicating Solutions' in the Provence-Alpes-Côte d’Azur Region. The paper highlights the decoupling of the two clusters overtime as a consequence of distinctive organizational structures. The diversity of the dynamics of the collective learning networks which emerges through the analysis of the collective R&D projects in the two high tech clusters shows that knowledge creation and innovation can follow different paths and questions the public policies implemented.
    Keywords: Cluster Policy, Competitiveness Cluster, Collective Learning Networks, Innovation, Social Network Analysis, Sophia Antipolis, Rousset
    JEL: R11 R58 L2 L52
    Date: 2017–12
  5. By: Ganguli, Ina (University of Massachusetts–Amherst); Lin, Jeffrey (Federal Reserve Bank of Philadelphia); reynolds, nicholas (brown university)
    Abstract: We show evidence of localized knowledge spillovers using a new database of multiple invention from U.S. patent interferences terminated between 1998 and 2014. Patent interferences resulted when two or more independent parties simultaneously submitted identical claims of invention to the U.S. Patent Office. Following the idea that inventors of identical inventions share common knowledge inputs, interferences provide a new method for measuring spillovers of tacit knowledge compared with existing (and noisy) measures such as citation links. Using matched pairs of inventors to control for other factors contributing to the geography of invention and distance-based methods, we find that interfering inventor pairs are 1.4 to 4 times more likely to live in the same city or region. These results are not driven exclusively by observed social ties among interfering inventor pairs. Interfering inventors are also more geographically concentrated than inventors who cite the same prior patent. Our results emphasize geographic distance as a barrier to tacit knowledge flows.
    Keywords: Localized knowledge spillovers; multiple invention; patents; interferences
    JEL: O30 R12
    Date: 2017–12–21
  6. By: Bredtmann, Julia; Nowotny, Klaus; Otten, Sebastian
    Abstract: This paper analyzes the interaction between migrant networks and linguistic distance in the location choice of migrants to the EU at the regional level. We test the hypothesis that networks and the ability to communicate in the host country language, proxied by linguistic distance, are substitutes in the location decision. Based on individual level data from a special evaluation of the European Labour Force Survey (EU-LFS) and a random utility maximization framework, we find that networks have a positive effect on the location decisions while the effect of linguistic distance is negative. We also find a strong positive interaction effect between the two factors: networks are more important the larger the linguistic distance between the home country and the host region, and the negative effect of linguistic distance is smaller the larger the network size. In several extensions and robustness checks, we show that this substitutable relationship is extremely robust.
    Keywords: Location choice,ethnic networks,linguistic distance,EU migration,multilateral resistance
    JEL: F22 J61 R23
    Date: 2017
  7. By: Riccardo Crescenzi; Guido de Blasio; Mara Giua
    Abstract: This paper evaluates a program of subsidies for Collaborative Industrial Research (co-)funded by the EU Cohesion Policy in Italy mobilizing over 1 billion euros. This program anticipated in the 2007-2013 funding cycle some of the key features of Smart Specialization Strategy (S3) programmes, offering evidence-based insights on potential challenges to the practical application of the S3 approach. The programme was not successful in boosting investments, value added or employment of beneficiary firms. The collaborative dimension of the projects added limited value and a more generous level funding would have not improved effectiveness. However, positive impacts emerged in low tech sectors.
    Keywords: Cohesion Policy, Smart Specialisation, Policy Evaluation, Innovation, European Union
    JEL: O18 R11 R58
    Date: 2017–12
  8. By: Gabriel Ahlfeldt; Elisabetta Pietrostefani
    Abstract: This paper synthesises the state of knowledge on the economic effects of density. We consider 15 outcome categories and 209 estimates of density elasticities from 103 studies. More than 50% of these estimates have not been previously published and have been provided by authors on request or inferred from published results in auxiliary analyses. We contribute own estimates of density elasticities of 16 distinct outcome variables that belong to categories where the evidence base is thin, inconsistent or non-existent. Along with a critical discussion of the quality and the quantity of the evidence base we present a set of recommended elasticities. Applying them to a scenario that roughly corresponds to an average high-income city, we find that a 1% increase in density implies positive per capita net present values of wage and rent effects of $280 and $485. The decrease in real wage net of taxes of $342 is partially compensated for by an aggregate amenity effect of $221 and there is a positive external welfare effect of $52. Density has important positive amenity and resource implications, but also appears to create a scarcity rent, which harms renters and first-time buyers.
    Keywords: compact, city, density, meta-analysis, elasticity, net present value
    JEL: R38 R52 R58
    Date: 2017
  9. By: Jian Gao
    Abstract: Collective learning in economic development has been revealed by recent empirical studies, however, investigations on how to benefit most from its effects remain still lacking. In this paper, we explore the maximization of the collective learning effects using a simple propagation model to study the diversification of industries on real networks built on Brazilian labor data. For the inter-regional learning, we find an optimal strategy that makes a balance between core and periphery industries in the initial activation, considering the core-periphery structure of the industry space--a network representation of the relatedness between industries. For the inter-regional learning, we find an optimal strategy that makes a balance between nearby and distant regions in establishing new spatial connections, considering the spatial structure of the integrated adjacent network that connects all regions. Our findings suggest that the near to by random strategies are likely to make the best use of the collective learning effects in advancing regional economic development practices.
    Date: 2017–12
  10. By: Porras, María Sylvina; Martín-Román, Ángel L.
    Abstract: The present research provides evidence on the determinants driving the differences in the unemployment-output relationship in Spanish regions. We followed a two-step approach. First, we estimated a set of time-varying Okun’s coefficients (rolling-window) for the autonomous communities in Spain (1981-2013) showing significant regional differences as well as important changes over time. At the second step, we estimated FMOLS and DOLS models to explain regional differences in Okun’s law. The results obtained lead to the conclusion that differences in the weight of self-employment and its variations over time prove relevant when accounting for differences in Okun’s law between Spanish regions, and its effect (in standard deviations) is greater than that of variations in labour productivity per worker, which so far had been considered the main driver of regional discrepancies. The economic policy implications of this outcome are huge due to the fact that Spanish regional and national authorities are promoting self-employment.
    Keywords: Okun’s Law,self-employment,unemployment,GDP,Spanish regions
    JEL: C23 R11 R23 E24 J64
    Date: 2017
  11. By: Bastien Bernela (CRIEF - Centre de Recherche sur l'Intégration Economique et Financière - Université de Poitiers); Marie Ferru (CRIEF - Centre de Recherche sur l'Intégration Economique et Financière - Université de Poitiers); Marc-Hubert Depret (CRIEF - Centre de Recherche sur l'Intégration Economique et Financière - Université de Poitiers)
    Abstract: Adding to the growing literature on cluster life cycle (CLC), this paper gives new insights focusing on the crucial stage of genesis. We argue that the process by which clusters came into existence matters by structuring its further development. We conceptualize this dynamic process through an evolutionary perspective-considering the relevance of history-enriched by the relational and institutional ones, giving the structuring role of interpersonal ties and institutions. To implement this comprehensive approach of CLC, data availability becomes a great challenge since historical and relational materials are needed. We suggest using an original mixed method we apply on a French cluster. Whereas our understanding of the preexisting stages of the cluster official birth is only based on qualitative data, its evolution is derived from quantitative approach interpreted by qualitative one. The CLC appears to be driven by historical features which make it able to adapt over time.
    Keywords: Cluster life cycle,genesis,embeddedness,mixed method,cluster policy
    Date: 2017–10–15
  12. By: Carlos Góes; Izabela Karpowicz
    Abstract: In this study, we document the decline in income inequality and a convergence in consumption patterns in Brazilian states in a new database constructed from micro data from the national households’ survey. We adjust the state-Gini coefficients for spatial price differences using information on households’ rental prices available in the survey. In a panel regression framework, we find that labor income growth, formalization, and schooling contributed to the decline in inequality during 2004-14, but redistributive policies, such as Bolsa Família, have also played a positive role. Going forward, it will be important to phase out untargeted subsidies, such as public spending on tertiary education, and contain growth of public sector wages, to improve budgetary efficiency and protect gains in equality.
    Date: 2017–10–31
  13. By: Neumann, Uwe
    Abstract: In many European countries the number of employees hired via temporary work agencies has increased considerably over the past two decades, up to around 2% of the total workforce in the European Union today. Different studies have found the demand for agency employment to precede GDP growth. This paper explores to what extent firms utilised agency work as a strategic 'buffer' to adapt to variation in labour demand in Germany over the period 2006-2014, i.e. before, during and after the crisis of 2008/2009. Drawing on microdata from a representative employer survey (IAB Establishment Panel) and statistics on regional labour markets, the analysis finds only limited evidence on a systematic firm-level buffer function of temporary agency work. Rather, in many firms hiring from agencies is possibly part of a business strategy relying on flexible recruitment. An analysis of the average treatment effect on the treated (ATT) using a propensity score matching procedure suggests that particularly in regions with high unemployment, such flexibility during the crisis supported adaptation of client firms to economic change, since they were less reluctant than non-clients to hire after the crisis.
    Keywords: Temporary agency work,regional labour markets,establishment data,propensity score matching
    JEL: L25 J23 M54 R11
    Date: 2017
  14. By: Carmen Camacho (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Agustín Pérez-Barahona (THEMA - Théorie économique, modélisation et applications - Université de Cergy Pontoise - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Dynamic spatial theory has been a fruitful approach to understand economic phenomena involving time and space. However, this new field has opened a set of questions still unresolved in the literature. For instance, the identification of the social optimal allocation of economic activity across time and space has not been ensured yet in economic growth. By means of a monotone method, we study in this paper the optimal solution of spatial Ramsey-type models. We analytically prove, under fairly general assumptions, the existence of a unique social optimum. The iterative nature of this approach also allows us to present a new algorithm to simulate the optimal trajectories of the economy. We provide two economic illustrations of our method. Firstly, we apply our existence result to the spatial growth model and to a framework for optimal land-use planning, concluding that these problems are well-posed. We then consider the spatial growth model in order to investigate the importance of capital mobility in economic growth. We particularly underline the spatial dynamic implications of this feature on social welfare and income inequality.
    Keywords: Control,Spatial dynamics,Ramsey model,Partial differential equations
    Date: 2017–12

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