nep-geo New Economics Papers
on Economic Geography
Issue of 2019‒04‒01
eleven papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Unravelling the forces underlying urban industrial agglomeration By Neave O'Clery; Samuel Heroy; Francois Hulot; Mariano Beguerisse-Diaz
  2. Let There Be Light: Trade and the Development of Border Regions By Marius BRÜLHART; Olivier CADOT; Alexander HIMBERT
  3. The relationship of policy induced R&D networks and inter-regional knowledge diffusion By Marcel Bednarz; Tom Broekel
  4. The Urban Wage Premium in Imperfect Labour Markets By Boris Hirsch; Elke J. Jahn; Alan Manning; Michael Oberfichtner
  5. Cities, Lights, and Skills in Developing Economies By Jonathan I. Dingel; Antonio Miscio; Donald R. Davis
  6. Coherent estimations for residential photovoltaic uptake in Germany including spatial spillover effects By Jan Paul Baginski; Christoph Weber
  7. Calling from the outside: The role of networks in residential mobility By Buechel, Konstantin; Puga, Diego; Viladecans-Marsal, Elisabet; von Ehrlich, Maximilian
  8. Geography, Competition and Optimal Multilateral Trade Policy By Antonella Nocco; Gianmarco I. P. Ottaviano; Matteo Salto
  9. Tariffs, Domestic Import Substitution and Trade Diversion in Input-Output Production Networks: how to deal with Brexit By Raffaele Giammetti
  10. Diversificación productiva y especializaciones sectoriales en Chile By Ignacio Rodríguez Rodríguez; Paulina Sanhueza Martínez
  11. Innovationsbasierter regionaler Strukturwandel: Strukturschwache Regionen in Deutschland By Koschatzky, Knut; Kroll, Henning

  1. By: Neave O'Clery; Samuel Heroy; Francois Hulot; Mariano Beguerisse-Diaz
    Abstract: As early as the 1920's Marshall suggested that firms co-locate in cities to reduce the costs of moving goods, people, and ideas. These 'forces of agglomeration' have given rise, for example, to the high tech clusters of San Francisco and Boston, and the automobile cluster in Detroit. Yet, despite its importance for city planners and industrial policy-makers, until recently there has been little success in estimating the relative importance of each Marshallian channel to the location decisions of firms. Here we explore a burgeoning literature that aims to exploit the co-location patterns of industries in cities in order to disentangle the relationship between industry co-agglomeration and customer/supplier, labour and idea sharing. Building on previous approaches that focus on across- and between-industry estimates, we propose a network-based method to estimate the relative importance of each Marshallian channel at a meso scale. Specifically, we use a community detection technique to construct a hierarchical decomposition of the full set of industries into clusters based on co-agglomeration patterns, and show that these industry clusters exhibit distinct patterns in terms of their relative reliance on individual Marshallian channels.
    Date: 2019–03
  2. By: Marius BRÜLHART (FERDI); Olivier CADOT (Faculté des hautes études commerciales - Université de Lausanne); Alexander HIMBERT (University of Lausanne)
    Abstract: Does international trade help or hinder the economic development of border regions relative to interior regions? Theory tends to suggest that trade helps, but it can also predict the reverse. The question is policy relevant as regions near land borders are generally poorer, and sometimes more prone to civil conflict, than interior regions. We therefore estimate how changes in bilateral trade volumes affect economic activity along roads running inland from international borders, using satellite night-light measurements for 2,186 border-crossing roads in 138 countries. We observe a significant ‘border shadow’: on average, lights are 37 percent dimmer at the border than 200 kilometers inland. We find this difference to be reduced by trade expansion as measured by exports and instrumented with tariffs on the opposite side of the border. At the mean, a doubling of exports to a particular neighbor country reduces the gradient of light from the border by some 23 percent. This qualitative finding applies to developed and developing countries, and to rural and urban border regions. Proximity to cities on either side of the border amplifies the effects of trade. We provide evidence that local export-oriented production is a significant mechanism behind the observed effects.
    Keywords: Trade liberalization, border regions, economic geography, night lights data
    JEL: F14 F15 R11 R12
    Date: 2019–02
  3. By: Marcel Bednarz; Tom Broekel
    Abstract: Knowledge diffusion is argued to be strongly influenced by knowledge networks and spatial structures. However, empirical studies primarily apply an indirect approach of measuring their impact. Moreover, little is known about how policy can influence the spatial diffusion of knowledge. This paper seeks to fill this gap by empirically testing the effects of policy induced knowledge networks on the propensity of inter-regional patent citations. We use patent citation data for 141 labor market regions in Germany between 2000 to 2009, which is merged with information on subsidized joint R&D projects. Based on the latter, we construct a network of subsidized R&D collaboration. Its impact on inter-regional patent citations is evaluated with binomial and negative binomial regression models. Our findings do not indicate that inter- regional network links created by public R&D subsidies facilitate patent citations and hence, inter-regional knowledge diffusion.
    Keywords: knowledge diffusion, subsidized R&D-networks, gravity model, negative binomial regression, proximity, spillover
    JEL: L14 O18 O33 O38 C31 D83 O18
    Date: 2019–03
  4. By: Boris Hirsch; Elke J. Jahn; Alan Manning; Michael Oberfichtner
    Abstract: Using administrative data for West Germany, this paper investigates whether part of the urban wage premium stems from fierce competition in thick labour markets. We first establish that employers possess less wage-setting power in denser markets. Local differences in wage-setting power predict 1.8-2.1% higher wages from a 100 log points increase in population density. We further document that the observed urban wage premium from such an increase drops by 1.5-1.9pp once conditioning on local search frictions. Our results therefore suggest that a substantial part of the urban wage premium roots in differential imperfections across local labour markets.
    Keywords: urban wage premium, imperfect labour markets, monopsony, search frictions
    JEL: R23 J42 J31
    Date: 2019–03
  5. By: Jonathan I. Dingel; Antonio Miscio; Donald R. Davis
    Abstract: In developed economies, agglomeration is skill-biased: larger cities are skill-abundant and exhibit higher skilled wage premia. This paper characterizes the spatial distributions of skills in Brazil, China, and India. To facilitate comparisons with developed-economy findings, we construct metropolitan areas for each of these economies by aggregating finer geographic units on the basis of contiguous areas of light in nighttime satellite images. Our results validate this procedure. These lights-based metropolitan areas mirror commuting-based definitions in the United States and Brazil. In China and India, which lack commuting-based definitions, lights-based metropolitan populations follow a power law, while administrative units do not. Examining variation in relative quantities and prices of skill across these metropolitan areas, we conclude that agglomeration is also skill-biased in Brazil, China, and India.
    JEL: C8 O1 O18 R1
    Date: 2019–03
  6. By: Jan Paul Baginski; Christoph Weber (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen (Campus Essen))
    Abstract: The share of solar energy in German electricity generation has increased strongly over recent years. This is largely due to guaranteed feed-in tariffs together with decreasing prices for solar panels. Residential PV systems play a decisive part providing households with a possibility to contribute to the Energiewende and benefit from the use of renewable energy. Their regional distribution varies distinctly across Germany implying different requirements in distribution grids as well as uneven utilization of national policy measures. Our paper focusses on the spatial diffusion of roof mounted PV systems and the underlying drivers in Germany. We extend previous findings not only by including additional explanatory variables but also by considering cross-regional spillover using spatial econometric models. Estimation results show that spatial dependence is a relevant determinant for explaining regional clusters of PV adoption. Recurrent visual perception or peer-effects might explain spatial autocorrelation as potential adopters follow decisions by actors in the proximity. Another reason for spatial dependence might be a concentration of craft skills or solar initiatives, which leads to an accelerated diffusion in a region and its surroundings. Whereas the first explanation corresponds to the specification of a spatial lag model, the latter is in line with a spatial error specification. However, our results indicate that although spatial lag is present, spatial dependence in the residuals has higher explanatory power. Hence, we suppose that spatial spillover is not mainly driven by social imitation but by unobserved regional characteristics. Notably, high values for solar radiation, the share of detached houses, electricity demand and inverse population density of a region favour the PV uptake.
    Keywords: residential photovoltaic, spatial econometrics, spatial spillover
    JEL: C21 Q28 Q42
  7. By: Buechel, Konstantin; Puga, Diego; Viladecans-Marsal, Elisabet; von Ehrlich, Maximilian
    Abstract: Using anonymised cellphone data, we study the role of social networks in residential mobility decisions. Individuals with few local contacts are more likely to change residence. Movers strongly prefer places with more of their contacts close-by. Contacts matter because proximity to them is itself valuable and increases the enjoyment of attractive locations. They also provide hard-to-find local information and reduce frictions, especially in home-search. Local contacts who left recently or are more central are particularly influential. As people age, proximity to family gains importance relative to friends.
    Keywords: cellphone data; residential mobility; Social Networks
    JEL: R23
    Date: 2019–03
  8. By: Antonella Nocco; Gianmarco I. P. Ottaviano; Matteo Salto
    Abstract: How should multilateral trade policy be designed in a world in which countries differ in terms of market access and technology, and firms with market power differ in terms of productivity? We answer this question in a model of monopolistic competition in which variable markups increasing in firm size are a key source of misallocation across firms and countries. We use `disadvantaged' to refer to countries with smaller market size, worse state of technology (in terms of higher innovation and production costs), and worse geography (in terms of more remoteness from other countries). We show that, in a global welfare perspective, optimal multilateral trade policy should: promote the sales of low cost firms to all countries, but especially to disadvantaged ones; trim the sales of high cost firms to all countries, but especially to disadvantaged ones; reduce firm entry in all countries, but especially in disadvantaged ones. This would not only restore efficiency but also reduce welfare inequality between advantaged and disadvantaged countries if their differences in market size, state of technology and geography are large enough.
    Keywords: International trade policy, monopolistic competition, firm heterogeneity, pricing to market, multilateralism
    JEL: D4 D6 F1 L0 L1
    Date: 2019–03
  9. By: Raffaele Giammetti (Universita' Politecnica delle Marche)
    Abstract: This paper challenges and complements existing studies on the economic impact of Brexit providing a discussion of the UK's decision to leave the EU and how it will affect international trade networks and value-added. Using the World Input-Output Database, we develop a multi-sector inter-country model that allows us to identify all the channels through which the economic effects of Brexit would propagate. The inclusion of global value chains and indirect Brexit effects in the model leads to estimates that diverge with the results of the main literature. Indeed our findings, suggest that Brexit could be risky and costly not only for the UK but also for many EU countries. Furthermore, building on the Dietzenbacher and Lahr (2013) method of hypothetical expansion, we develop a second model and present the first empirical analysis on the consequences of domestic import substitution and trade diversion policies in Input-Output schemes. We found that allowing sectors and countries to partly substitute foreign products, leads to significantly lower losses for both macro-regions. In the second model, the UK and EU27 would lose, at worst, the 0.05 and 0.5 percent of value-added, respectively.
    Keywords: Brexit, trade barriers, tariffs, input-output analysis, value chains, import substitution, production networks.
    JEL: C67 R15 F13 F14 O21
    Date: 2019–03
  10. By: Ignacio Rodríguez Rodríguez (Universidad de La Frontera); Paulina Sanhueza Martínez (Universidad de La Frontera)
    Abstract: El trabajo busca explorar las condiciones de diversificación o concentración productiva de las regiones en Chile, identificando sus especializaciones sectoriales relativas. Para lo anterior, para cada región se calculan indicadores de diversificación/concentración productiva -Índice de Herfindahl (IH)- e indicadores de especialización sectorial -Coeficiente de Especialización (CE)- utilizando fuentes de información secundaria. Los resultados indican que, en general, las regiones de Chile se muestran como territorios diversificados. En efecto, algunas regiones se especializan en actividades económicas para las cuales disfrutan de ventajas comparativas, como es el caso de las regiones mineras del norte, mientras que otras se benefician de la diversificación de su base productiva, como ocurre en la Región Metropolitana. No obstante, en algunas regiones, y a nivel nacional, existe una excesiva dependencia de los recursos naturales, lo cual puede comprometer el potencial de desarrollo de las regiones, y del país en su conjunto.
    Keywords: Desarrollo económico regional, desarrollo endógeno, especialización productiva, Chile.
    JEL: R11 R58 O18
    Date: 2019–02–01
  11. By: Koschatzky, Knut; Kroll, Henning
    Abstract: Ziel dieses Papiers ist die Entwicklung einer Regionstypologie zur Identifikation von strukturschwachen Regionen mit Blick auf einen innovationsbasierten regionalen Strukturwandel. Strukturschwach ist in diesem Zusammenhang nicht als negative Bewertung zu verstehen, sondern als Chancen- und Potenzialeinschätzung, auf der Basis bisheriger Strukturen und Entwicklungen sowie flankierender politischer wie privater Maßnahmen die regionale Innovationsfähigkeit und insgesamt die Positionierung der Region mit Blick auf die Gesamtheit aller Regionen zu verbessern. Der Vergleich der bisherigen Fördergebietskulisse mit einer Regionstypisierung, die innovationsbezogene Indikatoren berücksichtigt, soll einerseits den Zusammenhang zwischen Struktur- und Innovationsschwäche aufzeigen und andererseits Regionen identifizieren, die strukturschwach sind, aber abweichend davon Innovationspotenziale aufweisen. Politische Schlussfolgerung könnte es sein, in strukturschwachen Regionen die Innovationsfähigkeit zu fördern, aber auch gezielt strukturschwache Regionen mit bereits bestehenden Innovationspotenzialen zu unterstützen, um hier die Innovationsbedingungen weiter zu verbessern.
    Date: 2019

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