nep-geo New Economics Papers
on Economic Geography
Issue of 2018‒10‒15
thirteen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Inter-city Trade By Tomoya Mori; Jens Wrona
  2. The Evolution of Zipf's Law for U.S. Cities By Angelina Hackmann; Torben Klarl
  3. The Regional Economic Impacts of University Research and Science Parks By Link, Albert; Hobbs, Kelsi; Shelton, Terri
  4. So close yet so unequal: Neighborhood inequality in American cities By Francesco Andreoli; Eugenio Peluso
  5. European Regional Productive Performance under a Metafrontier Framework. The role of patents and human capital on technology gap? By Kounetas, Kostas; Napolitano, Oreste; Stavropoulos, Spyridon; Burger, Martijn
  6. Agglomeration, productivity and the role of transport system improvements By Börjesson, Maria; Isacsson, Gunnar; Andersson, Matts; Anderstig, Christer
  7. Diverging Trends in National and Local Concentration By Rossi-Hansberg, Esteban; Sarte, Pierre-Daniel G.; Trachter, Nicholas
  8. What Determines Regional Labor Shares? Evidence from Korea By Kim, David; Kim, Woo-Yung
  9. A Test of Supply-side Explanations of Geographic Variation in Health Care Use By Kevin Callison; Robert Kaestner; Jason Ward
  10. ARE CONSUMER INFLATION EXPECTATIONS AN INTERNATIONAL PHENOMENON? Results of spatial panel regressions models By Karolina Tura-Gawron; Maria Siranova; Karol Fisikowski
  11. "Universities, spillovers and the resilience of inequality in the human-capital century" By Alexandra López Cermeño
  12. Geography, Trade and Power-law Phenomena By Chang, Pao-Li; Hsu, Wen-Tai
  13. Spatial effects on local government efficiency By Raffaella Santolini

  1. By: Tomoya Mori; Jens Wrona
    Abstract: We propose and apply a new theory-consistent algorithm, which uses disaggregated inter-city trade data to identify a pyramidic city system with central places and associated hinterlands. Because central places possess more industries than the cities in their hinterlands, and because industries, which are exclusive to central places, are more likely to export to the small, peripheral cities in the central place’s hinterland, we find that aggregate exports from central places to their hinterlands are two to five times larger than predicted by gravity forces. Using a simple decomposition approach, we show that this upward bias results from aggregation along the extensive industry margin, which is why the bias is much smaller and only marginally significant if estimation is conducted in a theory-consistent way at the disaggregated industry level.
    Keywords: Inter-city trade, central place theory, gravity equation, aggregation bias
    JEL: F14 F12 R12
    Date: 2018
  2. By: Angelina Hackmann; Torben Klarl
    Abstract: Exploiting the cascade structure of cities and based on a dataset for U.S. cities between 1840 and 2016, the aim of this short paper is to answer three important questions: First, do we observe that the U.S. city size distribution exhibits a smooth transition to Zipf's law from the beginning or are there periods showing a pronounced departure from Zipf's law? Second, if we observe periods of departure, which alternative laws instead should be used to accurately describe the city size distribution? Third, employing information from the cascade structure of cities, do we always find evidence for primate cities for a specific period of time? Inter alia, we find that the exact Zipf's law has evolved over time from the more general, so-called three-parameter Zipf's law which can be traced back to Mandelbrot (1982).
    Keywords: city size distributions, Zipf’s law, hierachical scaling law, urban systems
    JEL: R11 R12 R15
    Date: 2018
  3. By: Link, Albert (University of North Carolina at Greensboro, Department of Economics); Hobbs, Kelsi (University of North Carolina at Greensboro, Department of Economics); Shelton, Terri (University of North Carolina at Greensboro, Department of Economics)
    Abstract: This paper focuses on the regional economic impacts of U.S. university research and science parks. Motivating this focus is the fact that the landscape for private-sector research is changing, and future research might well emphasize America’s “new geography of innovation.” Thus, university research and science parks might face, if they are not already doing so, pressure to retain current tenants and competition for future tenants. We find that only 11 of 146 research and science parks in the United States have, in the spirit of public accountability, conducted an economic impact study. One reason for the paucity of such studies is that universities are unfamiliar about how to conduct as well as how to interpret the findings from such a study. We offer an economic impact method for park administrators to follow if they proceed to document the regional economic impact of their park.
    Keywords: University research and science park; Public accountability; Economic impact
    JEL: H43 H54 O32
    Date: 2018–10–08
  4. By: Francesco Andreoli (LISER); Eugenio Peluso (University of Verona)
    Abstract: This paper contributes to the literature on neighborhood inequality along both theoretical and empirical lines. We introduce a new neighborhood inequality index (NI) to measure income inequality within individual neighborhoods of varying sizes, and study its normative and statistical properties. The NI index is used in combination with a large database of income distributions defined on a fine-grained geographic scale to study neighborhood inequality in American cities over the last 35 years. Inequality within small individual neighborhoods is found to grow steadily over the period, albeit heterogeneously across cities. We investigate the intergenerational consequences of a rising NI index, exploiting labor market responses to minimum wage regulation as a source of identification. We find that lower neighborhood inequality during childhood makes income mobility for children with a disadvantaged parental background more likely.
    Keywords: income inequality, individual neighborhood, geostatistics, census, ACS, intergenerational mobility, divided city, mixed city.
    JEL: D31 D63 C21 R23 J62 I14
    Date: 2018–09
  5. By: Kounetas, Kostas; Napolitano, Oreste; Stavropoulos, Spyridon; Burger, Martijn
    Abstract: Assessing regional convergence is an important issue both at the national and at the supranational level, such as the level of European regions. Regional convergence and productivity growth are also principles of the European regional policy. This paper studies regional productivity convergence among 232 NUTS-2 European regions for the period 2003-2011. Despite the European regional policies implemented in the last two decades, the technology gap between European regions has only increased. The objective of this paper is to provide new evidence on production efficiency and the technology gap in European regions. We present a two-stage model of regional productive performance using a meta-frontier framework and a PVAR analysis. The main conclusion is that there exist significant differences in productive performance that confirm the North-South division in Europe. Finally, the results from the PVAR model provide robust evidence for the role played by human capital and innovation activity through patent realization in the technology gaps at the regional level in Europe.
    Keywords: Metafrontier, DEA bootstrap, PVAR, Spillovers, European Regions.
    JEL: C15 D24 O47 R11
    Date: 2018–01–06
  6. By: Börjesson, Maria (CTS - Centre for Transport Studies Stockholm (KTH and VTI)); Isacsson, Gunnar (Swedish Transport Administraton); Andersson, Matts (WSP); Anderstig, Christer (WSP)
    Abstract: We explore how the transport improvements impact agglomeration and thereby productivity in mid-Sweden including Stockholm 1995-2006. We measure agglomeration, and changes in agglomeration in response to transport improvements, based on travel times. This is a more accurate measure of agglomeration than previously used and also necessary for understanding how governments can impact agglomeration, and thereby productivity, by transport investments. We regress temporal changes in wages on temporal changes in agglomeration applying a FE estimator. We deal with the potential endogeneity using a novel instrument variable. Our best estimates of the agglomeration elasticity on productivity lie within the interval 0.028-0.035.
    Keywords: Agglomeration; wage; productivity; Transport investments; Wider Economic Impacts; Appraisal
    JEL: R12 R41 R42
    Date: 2018–10–03
  7. By: Rossi-Hansberg, Esteban (Princeton University); Sarte, Pierre-Daniel G. (Federal Reserve Bank of Richmond); Trachter, Nicholas (Federal Reserve Bank of Richmond)
    Abstract: Using U.S. NETS data, we present evidence that the positive trend observed in national product-market concentration between 1990 and 2014 becomes a negative trend when we focus on measures of local concentration. We document diverging trends for several geographic definitions of local markets. SIC 8 industries with diverging trends are pervasive across sectors. In these industries, top firms have contributed to the amplification of both trends. When a top firm opens a plant, local concentration declines and remains lower for at least seven years. Our findings, therefore, reconcile the increasing national role of large firms with falling local concentration and a likely more competitive local environment.
    Keywords: national product-market concentration; local concentration
    JEL: E23 L11 R12
    Date: 2018–09–24
  8. By: Kim, David; Kim, Woo-Yung
    Abstract: This study investigates the explanatory forces behind changes in labor shares over 2000-2014 in Korea. Unlike previous studies focusing on cross-national differences in labor shares, we focus on the changes in labor shares across regions. Utilizing Census of Establishments and the Economically Active Population Survey and constructing variables at the regional level, we estimate an array of cross-regional and panel VAR models. Our estimates from fixed effects models suggest that the movements in regional labor shares can be largely explained by differences in per capita income growth, the concentration of service industry, the average tenure of firms and union density. Results from panel VAR models generally confirm those obtained from the fixed effects models and also indicate that the effects of those factors on the labor share are significantly different between metropolitan cities and provinces. Technological progress plays a more prominent role in provinces than in cities while the concentration of markets (size of markup) is more important in cities than in provinces to explain the labor share movements. We also find evidence that trade dependence leads to a decline in labor share of income, which reflects capital mobility and labor saving competitive forces across nations. Our results show that it is important to take into account heterogeneities in product and labor markets in order to understand the changes in labor shares in regional income. This suggests that regional variations in industry and trades should be important considerations for policies aimed at targeting labor income.
    Keywords: labor share; Herfindahl-Hirschman index; fixed effects model; panel VAR; regional analysis
    Date: 2018–10
  9. By: Kevin Callison; Robert Kaestner; Jason Ward
    Abstract: Evidence of regional variation in health care utilization has been well-documented over the past 40 years. Yet uncertainty persists about whether this variation is primarily the result of supply-side or demand-side forces, and the difference matters for both theory and policy. In this article, we provide new evidence as to the cause of geographic variation in health care utilization. We do so by examining changes in health care use by the near-elderly as they transition from being uninsured into Medicare. Results provide support for a causal supply-side explanation of regional variation. Estimates indicate that gaining Medicare coverage in above-median spending regions increases the probability of at least one hospital visit by 36% and the probability of having more than five doctor visits by 25% relative to similar individuals in below-median spending regions.
    JEL: D43 H42 H51 I1 I11 I13
    Date: 2018–09
  10. By: Karolina Tura-Gawron (Gdansk University of Technology, Gdansk, Poland); Maria Siranova (University of Economics in Bratislava, Bratislava, Slovak Republik); Karol Fisikowski (Gdansk University of Technology, Gdansk, Poland)
    Abstract: This study examines the potential drivers and their spatial components of inflation expectations of consumers in 22 European Union countries by using the spatial Durbin model. The potential determinants are drawn from the macrosphere (oil prices, food prices, house prices, industrial production), financial sphere (money market interest rates, nominal effective exchange rate, key policy rate), and economic favourable cognition variables (consumer confidence indicator, short-term inflation volatility, medium–term memory reversal of inflation expectations). The implemented binary spatial weight matrices are based on the geographical and economic distances. The economic distance weights define the European Union global trade partners as the most proximal neighbours. Our results confirm the existence of an inherent spatial component in short-term consumers’ inflation expectations even when excluding effect of inflation rate anchoring. This finding may provide a possible explanation for disruptions found in monetary policy transmission mechanism in small and open economies. From other perspective, the more interlinked consumers’ expectations may open the path to better business cycle synchronisation and strengthen the process of EA convergence, improving the conditions for efficient and effective monetary policy conduct.
    Keywords: consumers’ inflation expectations, spatial analysis, European Union
    JEL: E52 E61 C21
    Date: 2018–09
  11. By: Alexandra López Cermeño (Lund University)
    Abstract: "This paper explores the impact of new universities established in the United States between 1930-2010. Differences in differences analysis on a sample of counties selected through propensity score matching enables the assessment of the impact of these universities on GDP, population, and different scales of market size. Evidence suggests that hosts of new universities grew around 20 per cent more, and the effect expanded to the nearby areas. Controlling for research quality and infrastructures shows that new cultural amenities generate growth that expands to nearby areas through the agglomeration of population but only during the short run."
    Keywords: "Economic Geography, Spillovers, Universities, United States"
    JEL: L8 N72 R12 I23
    Date: 2017–04
  12. By: Chang, Pao-Li (School of Economics, Singapore Management University); Hsu, Wen-Tai (School of Economics, Singapore Management University)
    Abstract: This article provides a review on the theories of various power-law phenomena related to geography and trade. In particular, we focus our discussion on the gravity equation of trade flows, the power law in firm size, and the link between the two - highlighting the roles of geography and trade in the theoretical modeling. We also discuss how these two power-law phenomena may be related to other power-law phenomena, such as those in income, firm productivity and city size.
    Date: 2018–09–27
  13. By: Raffaella Santolini (Dipartimento di Scienze Economiche e Sociali - UNIVPM)
    Abstract: Little attention has been paid to the spatial pattern in local governments' efficiency. This paper intends to fill this gap by conducting an empirical analysis on a sample of 246 Italian municipalities over the decade 1998-2008. The efficiency of the municipal government is measured in terms of the speed of payments for different categories of public spending. Estimation results reveal the presence of spatial interdependence in the speed of payments among the geographically close municipalities, with a greater magnitude for the speed of current outlays. Thus, municipalities mimic the speed with which public spending is carried out by their neighbors.
    Keywords: the speed of payments, neighborhood effects, spatial econometrics, Italian municipalities
    JEL: C23 H72 H73
    Date: 2018–10

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