nep-geo New Economics Papers
on Economic Geography
Issue of 2019‒03‒11
ten papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Relatedness, Complexity and Local Growth By Benjamin Davies; David C Maré
  2. Why does birthplace matter so much? By Bosquet, Clément; Overman, Henry G.
  3. Some causal effects of an industrial policy By Criscuolo, Chiara; Martin, Ralf; Overman, Henry G.; Van Reenen, John
  4. Heterogeneous Regional Innovation Spillovers of Universities of Applied Sciences By Tobias Schlegel; Curdin Pfister; Dietmar Harhoff; Uschi Backes-Gellner
  5. Spatial drivers of firm entry in Iran By Cheratian, Iman; Goltabar, Saleh; Calá, Carla Daniela
  6. Shedding Light on Regional Growth and Convergence in India By Chanda, Areendam; Kabiraj, Sujana
  7. Location and research activities organization: Could public/private cooperation be harmful? By Marie-Laure Cabon-Dhersin; Emmanuelle Taugourdeau
  8. Wage Equalization and Regional Misallocation: Evidence from Italian and German Provinces By Tito Boeri; Andrea Ichino; Enrico Moretti; Johanna Posch
  9. Does tax competition drive cooperation in local economic development policies? Evidence on inter-local business parks in Germany By Ivo Bischoff; Simon Melch; Eva Wolfschuetz

  1. By: Benjamin Davies (Motu Economic and Public Policy Research); David C Maré (Motu Economic and Public Policy Research)
    Abstract: We derive a measure of the relatedness between economic activities based on weighted correlations of local employment shares, and use this measure to estimate city and activity complexity. Our approach extends discrete measures used in previous studies by recognising the extent of activities' local over-representation and by adjusting for differences in signal quality between geographic areas with different sizes. We examine the contribution of relatedness and complexity to urban employment growth, using 1981–2013 census data from New Zealand. Complex activities experienced faster employment growth during our period of study, especially in complex cities. However, this growth was not significantly stronger in cities more dense with related activities. Relatedness and complexity appear to be most relevant for analysing how large, complex cities grow, and are less informative for understanding employment dynamics in small, less complex cities.
    Keywords: Relatedness, Complexity, Smart Specialisation
    JEL: R11 R12
    Date: 2019–03
  2. By: Bosquet, Clément; Overman, Henry G.
    Abstract: We consider the link between birthplace and wages. Using a unique panel dataset, we estimate a raw elasticity of wages with respect to birthplace size of 4.2%, two thirds of the 6.8% raw elasticity with respect to city size. Part of this effect simply reflects intergenerational transmission and the spatial sorting of parents, part is explained by the role that birthplace size plays in determining current city size. Lifetime immobility explains a lot of the correlation between birthplace and current city size: we show that 43.7% of individuals only ever work while living in the place they were born. Our results highlight the importance of intergenerational and individual sorting in helping explain the persistence of spatial disparities.
    Keywords: place of birth; spatial sorting; intergenerational transmission; lifetime mobility; ES/J021342/1; ES/G005966/1
    JEL: J61 J62 J31 R23
    Date: 2019–03–01
  3. By: Criscuolo, Chiara; Martin, Ralf; Overman, Henry G.; Van Reenen, John
    Abstract: We exploit changes in the area-specific eligibility criteria for a program to support jobs through investment subsidies. European rules determine whether an area is eligible for subsidies, and we construct instrumental variables for area eligibility based on parameters of these rule changes. Areas eligible for higher subsidies significantly increased jobs and reduced unemployment. A 10-percentage point increase in the maximum investment subsidy stimulates a 10 percent increase in manufacturing employment. This effect exists solely for small firms: large companies accept subsidies without increasing activity. There are positive effects on investment and employment for incumbent firms but not Total Factor Productivity.
    JEL: E24 G31 H25 L25 L52 R23
    Date: 2019–01–01
  4. By: Tobias Schlegel (University of Zurich); Curdin Pfister (University of Zurich); Dietmar Harhoff (Max Planck Institute for Innovation and Competition); Uschi Backes-Gellner (University of Zurich)
    Abstract: This paper investigates whether differences in regional economic preconditions lead to heterogeneity of innovation spillovers from newly established universities of applied sciences (UASs). Exploiting a quasi-random establishment of UASs in the 1990s in Switzerland, we analyse the heterogeneity of innovation spillovers from these UASs due to differences in regional economic preconditions — i.e. economic strength, industry structure and economic density. Our estimations show that stronger and denser regional economies and regions with high tech intensive industries exhibited significantly more innovation spillovers from new UASs than regions with less favourable economic preconditions. One possible explanation are agglomeration effects favouring innovation spillovers. Our results imply that nearby UASs do not have positive effects on innovation per se, a finding that is of particular interest for policy makers who decide on the location of public applied research institutions.
    Keywords: Research Institutions, Innovation, Regional Economic Activity
    JEL: I23 O38 R12
    Date: 2019–02
  5. By: Cheratian, Iman; Goltabar, Saleh; Calá, Carla Daniela
    Abstract: Given the importance of entry promotion to prompt economic growth and promote structural transformation, this paper investigates the regional determinants of firm entry in the 30 Iranian regions, considering four different sizes -micro, small, medium and large- over 2000-2015. Using a new and unique database, we estimate panel non-spatial and spatial lag and error dependence models. We find that regional factors explain firm entry, but the impact is not homogeneous across firms of different size. We also find that most types of firms are influenced by the negative effect of economic sanctions during the sample period. Keywords: firm entry, ecological approach, spatial models, Iranian economy.
    Keywords: Dinámica Empresarial; Creación de Empresas; Distribución Espacial; Iran;
    Date: 2019–01
  6. By: Chanda, Areendam; Kabiraj, Sujana
    Abstract: One of the well documented facts about India's rapid growth since 1991 has been the accompanying unequal sub-national experiences. In this paper, using unsaturated night-light data for 1996-2010, we investigate patterns of growth at the district level. We find evidence of absolute convergence. Disaggregating along rural and urban dimensions, we also show that this is mainly due to faster growth in rural areas. Further, districts that have grown faster are ones that are geographically disadvantaged - further away from the coast, with lower agricultural suitability of land, and more rugged terrains. The convergence results are also robust to a few of the major policy initiatives that overlapped during this time.
    Keywords: Convergence, Regional Growth, India, Rural-Urban, Night Lights
    JEL: O4 O40 O47 R11
    Date: 2017–05–15
  7. By: Marie-Laure Cabon-Dhersin (CREAM - Centre de Recherche en Economie Appliquée à la Mondialisation - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université); Emmanuelle Taugourdeau (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper investigates the organization and the distribution of research activities between nearby public and private laboratories. In a three-stage game, the 'size', 'location' and 'research effort' are determined under the assumption that public spillovers depend on the location of the private laboratory. We compare two scenarios in which the research efforts are decided either cooperatively or non-cooperatively. We show that for particular levels of subsidy granted to the public lab, higher funding favors spatial proximity and increases the total research effort in the cooperative case, while it diminishes the total effort in the non-cooperative one. Moreover, compared with the non-cooperative case, research cooperation i) may increase the distance between the two laboratories, ii) makes the public laboratory smaller, iii) increases the total research effort, but iv) is detrimental to the payoff of the whole research sector.
    Keywords: research cooperation,spatial location,public subsidy
    Date: 2018–11
  8. By: Tito Boeri; Andrea Ichino; Enrico Moretti; Johanna Posch
    Abstract: In many European countries, wages are determined by collective bargaining agreements intended to improve wages and reduce inequality. We study the local and aggregate effects of collective bargaining in Italy and Germany. The two countries have similar geographical differences in firm productivity—with the North more productive than the South in Italy and the West more productive than the East in Germany—-but have adopted different models of wage bargaining. Italy sets wages based on nationwide contracts that allow for limited local wage adjustments, while Germany has moved toward a more flexible system that allows for local bargaining. We find that, as a consequence, Italy exhibits limited geographical wage differences in nominal terms and almost no relationship between local productivity and local nominal wages, while Germany has larger geographic wage differences and a tighter link between local wages and local productivity. While the Italian system is successful at reducing nominal wage inequality, it also creates costly geographic imbalances. In Italy, low productivity provinces have significantly higher non-employment rates than high productivity provinces, because employers cannot lower wages, while in Germany the relationship between non-employment and productivity is significantly weaker. In Italy, the relationship between real wages and productivity is negative, with lower real wages in the North compared to the South, since the latter has low housing costs but similar nominal wages. Thus, conditional on having a job, Italian workers have higher purchasing power in the South, but the probability of having a job is higher in the North. We conclude that the Italian system has significant costs in terms of forgone aggregate earnings and employment because it generates a spatial equilibrium where workers queue for jobs in the South and remain unemployed while waiting. If Italy adopted the German system, aggregate employment and earnings would increase by 11.04% and 7.45%, respectively. Our findings are relevant for several other European countries with systems similar to Italy’s.
    JEL: J0 R1
    Date: 2019–02
  9. By: Ivo Bischoff (University of Kassel); Simon Melch (University of Kassel); Eva Wolfschuetz (University of Kassel)
    Abstract: An increasing number of municipalities cooperates in the field of economic development. In this paper, we focus on a specific instrument in this field, namely the development of joint business parks. We apply a hazard model to data from West-German municipalities between 2000 and 2015. We find inter-local business parks to be more frequent among small municipalities and in constellations where suitable land is scarce. Our main focus rests on the role of tax competition. An analogy building on the literature on international tax coordination supports the hypothesis that inter-local business parks are more likely in regions where tax competition is intense. The evidence is affirmative: We find that the likelihood of inter-local business park formation to increase in the intensity of local tax competition.
    Keywords: Inter-local business parks, inter-municipal cooperation, tax competition, hazard model, Germany
    JEL: H77 H71 R58 R14
    Date: 2019
  10. By: Patrick Gianfaldoni (LBNC - Laboratoire Biens, Normes, Contrats - UAPV - Université d'Avignon et des Pays de Vaucluse); Lucile Manoury
    Abstract: Au cours des dix dernières années, en France, la baisse des subventions publiques et le recours aux marchés publics dans les politiques sociales ont fragilisé significativement les structures associatives de petite taille. Cette évolution institutionnelle favorise des logiques de développement territorial et ouvre parallèlement une fenêtre d'opportunité pour des acteurs philanthropiques comme les Fondations. Nous allons aborder le soutien philanthropique au développement territorial au travers de la stratégie d'intervention de deux des six délégations régionales de la Fondation de France (FdF). L'une l'a déployé sur un territoire rural, l'autre sur un territoire urbain. La FdF possède une conception du développement territorial qualifiée d'endogène, reposant sur la participation des habitants et la coopération entre différents acteurs locaux dans le but d'aider à la création d'activités et à la consolidation de liens sociaux. Nous voulons montrer que la FdF contribue aux processus d'innovation sociale territorialisée en appuyant des projets locaux novateurs et, par voie de conséquence, en renforçant les capacités d'expérimentation des acteurs associatifs implantés, de (re)création de proximités et de revitalisation des solidarités locales. Abstract During the last ten years, in France, the reduction in the public subsidies and the use to public procurement in social policies weakened significantly the small-sized associative structures. This institutional evolution favorite of the logics of territorial development and opens at the same time a window of opportunity for actors philanthropic as the Foundations. We are going to approach the philanthropic support for the territorial development through the strategy of intervention of two out of the six regional delegations of Fondation de France (FdF). One set it up on a rural territory, the other one on a urban territory. The FdF possesses a design of the territorial development considered as endogenous, based on the involvement of the inhabitants and on the cooperation between various local actors with the aim of helping in the creation of activities and in the consolidation of social links. This article shows that the FdF contributes to the processes of social territorialized innovation by supporting innovative local projects and, consequently, by strengthening the capacities of experiment of the well-established associative actors, of (re)creation of proximities and revitalization of the local solidarities. 2
    Date: 2018–06

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