nep-geo New Economics Papers
on Economic Geography
Issue of 2018‒01‒15
thirteen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Labour mobility, skill-relatedness and plant survival over the industry life cycle: Evidence from new Dutch plants By Ron Boschma; Riccardo Cappelli; Anet Weterings
  2. Spatial Scale of Agglomeration and Dispersion: Theoretical foundations and empirical implications By AKAMATSU Takashi; MORI Tomoya; OSAWA Minoru; TAKAYAMA Yuki
  3. Firm Productivity and Cities: The Case of Colombia By Jorge Balat; Camila Casas
  4. Social capital, resilience and regional diversification in Italy By Roberto Antonietti; Ron Boschma
  5. Cities and the Structure of Social Interactions: Evidence from Mobile Phone Data By Büchel, Konstantin; Ehrlich, Maximilian v.
  6. Linguistic Distance, Networks and Migrants' Regional Location Choice By Bredtmann, Julia; Nowotny, Klaus; Otten, Sebastian
  7. Change in urban concentration and economic growth By Susanne Frick; Andres Rodriguez-Pose
  8. The revenge of the places that don?t matter (and what to do about it) By Andres Rodriguez-Pose
  9. Biotech by Bricolage? Agency, institutional relatedness and new path development in peripheral regions By Luis Carvalho; Mario Vale
  10. Government Programs Can Improve Local Labor Markets, But Do They? A Re-Analysis of Ham, Swenson, Imrohoroğlu, and Song (2011) By Neumark, David; Young, Timothy
  11. Roads and the Spread of AIDS in Africa By Elodie Djemai
  12. Knowledge spillovers and patent citations: trends in geographic localization, 1976-2015 By Hyuk-Soo Kwon; Jihong Lee; Sokbae Lee; Ryungha Oh
  13. The Impact of Public Employment: Evidence from Bonn By Sascha O. Becker; Stephan Heblich; Daniel M. Sturm

  1. By: Ron Boschma; Riccardo Cappelli; Anet Weterings
    Abstract: Labour mobility is often considered a crucial factor for regional development. However, labour mobility is not good per se for local firms. There is increasing evidence that labour recruited from skill-related industries has a positive effect on plant performance, in contrast to intra-industry labour recruits. However, little is known about which types of labour are recruited in different stages of the evolution of an industry, and whether that matters for plant performance. This paper attempts to fill these gaps in the literature using plant-level data for manufacturing and services industries in the Netherlands for the period 2001-2009. Our study focuses on the effects of different types of labour recruits on the survival of new plants. We show that the effects of labour recruits from the same industry and from skill-related and unrelated industries on plant survival vary between the life cycle stages of industries. We also find that inter-regional labour flows do not impact on plant survival.
    Keywords: labour mobility, skill-relatedness, industry life cycle, industrial dynamics, firm survival
    JEL: R11 R12 O18
    Date: 2017–12
  2. By: AKAMATSU Takashi; MORI Tomoya; OSAWA Minoru; TAKAYAMA Yuki
    Abstract: This paper studies the theoretical properties of existing economic geography models with agglomeration and dispersion forces in a many-region setup, rather than their original two-region space, to investigate the spatial scale—global or local—of agglomeration and dispersion intrinsic to each model. We show that models in the literature reduce to two canonical classes that differ starkly in their engendered spatial patterns and comparative statics. Our formal results offer a consistent explanation for the set of various outcomes from the extant reduced-form regression analyses and also provide qualitative predictions of the treatment effects in the structural model-based studies on regional agglomeration.
    Date: 2017–12
  3. By: Jorge Balat (The University of Texas at Austin); Camila Casas (Banco de la República de Colombia)
    Abstract: In this paper we study the determinants of firm-level productivity in Colombia. We are interested in the effects of agglomeration forces that explain why manufacturing economic activity tends concentrate geographically as well as the effect of forces that can hurt productivity in high-density areas. An unfortunate major example of the latter forces in Colombia is its high levels of crime and terrorist attacks. We carry out this study by exploiting two very rich data sources: a firm-level panel which allows us to estimate firm-level productivity and a panel of municipality characteristics. To address selection and endogeneity issues in the estimation of firm-level productivity we use a control function approach. Our main findings are the following. First, scale economies do not seem to affect firm-level productivity. Second, we do find evidence of location economies (industrial specialization has a positive effect on productivity). Industrial variety, on the other hand, lowers productivity. It seems that firms in Colombia benefit from forming clusters and locating in cities with less industrial variety. We also find non-trivial effects of city fiscal performance, education level and quality, and crime and violent attacks. Classification JEL: R00, R12, R32, O14, L6, C14
    Keywords: Cities, Colombia, Productivity, TFP, Total Factor Productivity, Agglomeration
    Date: 2018–01
  4. By: Roberto Antonietti; Ron Boschma
    Abstract: There is increasing interest in the question how institutions affect regional diversification, especially in times of economic crisis. This paper investigates the role of social capital for the entry of new industries and the exits of existing industries in Italian provinces during the 2004-2010 period. Our results show that bridging social capital in a region positively contributes to the entry of new industries, especially when they are unrelated to existing specializations in the region. Diversification in regions (especially more unrelated diversification) tends to rely on bridging, not on bonding social capital. We also find that bridging social capital loses its impact on regional diversification during the crisis. Bonding, not bridging social capital, appears to make regions resilient in times of crisis, by reducing the probability of exit, especially in industries unrelated to existing specializations in regions. While bridging social capital has a negative effect on exit in times of prosperity, it shows no such effect anymore during the crisis period. Our findings suggest that bridging social capital loses its supportive role in times of crisis.
    Keywords: bonding social capital, bridging social capital, regional diversification, resilience, economic crisis, Italy
    JEL: R11 O14 D02
    Date: 2018–01
  5. By: Büchel, Konstantin (University of Bern and CRED); Ehrlich, Maximilian v. (‡University of Bern, CAGE, CRED, and CESifo)
    Abstract: Social interactions are considered pivotal to agglomeration economies. We explore a unique dataset on mobile phone calls to examine how distance and population density shape the structure of social interactions. Exploiting an exogenous change in travel times, we find that distance is highly detrimental to interpersonal exchange. We show that, despite distance-related costs, urban residents do not benefit from larger networks when spatial sorting is accounted for. Higher density rather generates a more efficient network in terms of matching and clustering. These differences in network structure capitalize into land prices, corroborating the hypothesis that agglomeration economies operate via network efficiency.Keywords: Economic Geography; Agglomeration Economies; Social Interactions; Network Analysis; Spatial Sorting JEL Classification: R10; R23; D83; D85; Z13.creation-date: 2018
  6. By: Bredtmann, Julia (RWI); Nowotny, Klaus (University of Salzburg); Otten, Sebastian (RWI)
    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: 2017–11
  7. By: Susanne Frick; Andres Rodriguez-Pose
    Abstract: The paper investigates (1) the evolution of urban concentration from 1985 to 2010 in 68 countries around the world and (2) the extent to which the degree of urban concentration affects national economic growth. It aims to overcome the limitations of existing empirical literature by building a new urban population dataset that allows the construction of a set of Herfindahl-Hirschman-Indices which capture a country?s urban structure in a more nuanced way than the indicators used hitherto. We find that, contrary to the general perception, urban concentration levels have on average decreased or remained stable (depending on indicator). However, these averages camouflage diverging trends across countries. The results of the econometric analysis suggest that there is no uniform relationship between urban concentration and economic growth. Urban concentration is beneficial for economic growth in high-income countries, while this effect does not hold for developing countries. The results differ from previous analyses that generally underscore the benefits of urban concentration at low levels of economic development. The results are robust to accounting for reverse causality through IV analysis, using exogenous geographic factors as instruments.
    Keywords: Agglomeration, urban primacy, economic growth, high-income countries, low-income countries
    JEL: R11 R12
    Date: 2018–01
  8. By: Andres Rodriguez-Pose
    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: Economic development, territorial inequality, regions, cities, populism, place-sensitive policies
    JEL: R11 O3 O43 D02
    Date: 2018–01
  9. By: Luis Carvalho; Mario Vale
    Abstract: This paper develops a framework to understand new industrial path development in peripheral regions based on notions of ?bricolage? and ?institutional relatedness?. While the first stresses the agency of (heterogeneous) actors? resourcefulness and strategic improvisation co-shaping new industrial paths, the latter highlights the transposition of related institutional settings within regions to amplify (or to limit) the search space for new industries. These arguments are used in conjunction to explain the development of an unlikely biotechnology path in the Portuguese Centro region, analysed since its emergence and over a period of more than ten years.
    Keywords: Path creation, Bricolage, Institutional Relatedness, Biotechnology, Emergence, Peripheral regions
    JEL: R11 O3 O43 D02
    Date: 2018–01
  10. By: Neumark, David (University of California, Irvine); Young, Timothy (University of California, Irvine)
    Abstract: Research on the effects of enterprise zones – especially state programs – has generally failed to find evidence of beneficial effects such job growth or poverty reduction. In contrast, Ham, Swenson, Imrohoroğlu, and Song (2011, hereafter HSIS) present evidence that state and federal enterprise zones (EZs) established in the 1990s substantially reduced poverty. However, their estimates of the effects of EZs in reducing poverty are badly overstated for two reasons. First, HSIS have a substantial error in their data on poverty rates by Census tract, which accounts for most of the estimated impact of state EZs that they find. Second, their estimates of the effects of federal Empowerment Zones (EMPZs) and Enterprise Communities (ENTCs) appear to be strongly influenced by selection of areas that experienced negative shocks. An estimator based on comparing federally designated zones to more-comparable areas that applied for and were rejected as zones, or became zones in the future, yields much smaller estimates than those in HSIS. And the large poverty-reduction effects of ENTCs that HSIS found are largely spurious – not surprisingly, given that ENTCs received meager benefits and had no hiring credits.
    Keywords: enterprise zones, poverty
    JEL: J23 J38 R12
    Date: 2017–11
  11. By: Elodie Djemai (PSL, Université Paris-Dauphine, LEDa, UMR DIAL)
    Abstract: We use GIS and HIV data from ve African countries to estimate the e ect of road proximity on HIV infection. We nd a negative e ect of the distance to the nearest paved road on the probability of being infected with HIV: a one standard-deviation rise in the distance (approximately 2.3 kilometers) reduces the probability of infection by 0.34-2.3 percentage points. Using slope as an instrument for road distance continues to produce a negative and signi cant estimated coecient. Alternative instrumental variables include historical routes and hypothetical lines connecting major cities as of 1890-1900. However this relationship may also re ect selection and reverse causality in individual choice of location, and we extensively discuss the role of migration. While the number of lifetime sexual partners is signi cantly in uenced by the presence of roads, in recent years the e ect of road distance in access to protection has disappeared.
    Keywords: HIV/AIDS epidemic, infrastructure, geography, risk-taking, Sub-Saharan Africa
    JEL: I10 R23 C21
    Date: 2017–12
  12. By: Hyuk-Soo Kwon (Institute for Fiscal Studies); Jihong Lee (Institute for Fiscal Studies); Sokbae Lee (Institute for Fiscal Studies and Columbia University and IFS); Ryungha Oh (Institute for Fiscal Studies)
    Abstract: This paper examines the trends in geographic localization of knowledge spillovers via patent citations, considering US patents from the period of 1976-2015. Despite accelerating globalization and widespread perception of the "death of distance," our multi-cohort "matched-sample" study reveals signi cant and growing localization effects of knowledge spillovers at both intra- and international levels after the 1980s. We also develop a novel network index based on the notion of "farness," which an instrumental variable estimation shows to be a signifi cant and sizable determinant of the observed trends at the state-sector level.
    Keywords: Innovation, knowledge spillovers, patent citation, agglomeration, network index, farness
    JEL: C36 C81 O33 O34 O51
    Date: 2017–12–06
  13. By: Sascha O. Becker; Stephan Heblich; Daniel M. Sturm
    Abstract: This paper evaluates the impact of public employment on private sector activity using the relocation of the German federal government from Berlin to Bonn in the wake of the Second World War as a source of exogenous variation. To guide our empirical analysis, we develop a simple economic geography model in which public sector employment in a city can crowd out private employment through higher wages and house prices, but also generates potential productivity and amenity spillovers. We find that relative to a control group of cities, Bonn experiences a substantial increase in public employment. However, this results in only modest increases in private sector employment with each additional public sector job destroying around 0.2 jobs in industries and creating just over one additional job in other parts of the private sector. We show how this finding can be explained by our model and provide several pieces of evidence for the mechanisms emphasised by the model.
    Keywords: economic geography, public employment, place-based policies, German division
    JEL: F15 J45 N44 R12
    Date: 2018–01

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