nep-geo New Economics Papers
on Economic Geography
Issue of 2019‒04‒08
twelve papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. How the 1906 San Francisco Earthquake Shaped Economic Activity in the American West By Ager, Philipp; Eriksson, Katherine; Hansen, Casper Worm; Lønstrup, Lars
  2. Cluster externalities, firm capabilities, and the recessionary shock: How the macro-to-micro-transition shapes firm performance during stable times and times of crisis By Hundt, Christian; Holtermann, Linus; Steeger, Jonas; Bersch, Johannes
  3. Population, light, and the size distribution of cities By Christian Duben; Melanie Krause
  4. The differential impact of open innovation on the efficiency of firms By Isabel Álvarez; Cipriano Quirós; Francisco J. Santos
  5. Estimating road transport costs between EU regions By Damiaan Persyn; Jorge Diaz-Lanchas; Javier Barbero
  6. Machine imports, technology adoption and local spillovers By Békés, Gábor; Harasztosi, Péter
  7. Local Labor Markets in Canada and the United States By David Albouy; Alex Chernoff; Chandler Lutz; Casey Warman
  8. Spatial Distribution of Population by Age in France over the Past 150 years By Florian Bonnet
  9. Market Frictions, Arbitrage, and the Capitalization of Amenities By Amine Ouazad; Romain Rancière
  10. Natural Resources, Economic Growth and Geography By González-Val, Rafael; Pueyo, Fernando
  11. How Britain Unified Germany: Endogenous Trade Costs and the Formation of a Customs Union By Huning, Thilo; Wolf, Nikolaus
  12. Smart Specialisation at work: The policy makers’ view on strategy design and implementation By Fabrizio Guzzo; Carlo Gianelle; Elisabetta Marinelli

  1. By: Ager, Philipp; Eriksson, Katherine; Hansen, Casper Worm; Lønstrup, Lars
    Abstract: This paper examines the long-run effects of the 1906 San Francisco Earthquake on the spatial distribution of economic activity in the American West. Using variation in the potential damage intensity of the earthquake, we show that more severely affected cities experienced lower population increases relative to less affected cities until the late 20th century. This long-lasting effect is largely a result of individuals' high geographical mobility at that time. Less affected areas became more attractive migration destinations in the immediate aftermath of the earthquake, which permanently changed the spatial distribution of economic activity in the American West.
    Keywords: American West; Economic Geography; Location of Economic Activity; migration; Natural Disasters
    JEL: N9 O15 O40 R11 R12
    Date: 2019–03
  2. By: Hundt, Christian; Holtermann, Linus; Steeger, Jonas; Bersch, Johannes
    Abstract: In this paper, we examine the macro-to-micro-transition of cluster externalities to firms and how it is affected by the macroeconomic instability caused by the recessionary shock of 2008/2009. Using data from 16,166 manufacturing and business services firms nested in 390 German regions, we employ within-firm regression techniques to estimate the impact of crosslevel interactions between firm- and cluster-level determinants on phase-related differences in firm performance between a pre-crisis (2004-2007) and a crisis period (2009-2011). The empirical results validate the existence of a macro-to-micro-transition that evolves best in the case of broad firm-level capabilities and variety-driven externalities. Furthermore, the results indicate that the transition strongly depends on the macroeconomic cycle. While the transition particularly benefits from a stable macroeconomic environment (2004-2007), its mechanisms are interrupted when being exposed to economic turmoil (2009-2011). Yet, the crisisinduced interruption of the transition is mainly restricted to the national recession in 2009. As soon as the macroeconomic pressure diminishes (2010-2011), we observe a reversion of the transmission mechanisms to the pre-crisis level. Our study contributes to the existing literature by corroborating previous findings that the economic performance of firms depends on a working macro-to-micro transition of external resources, which presupposes sufficient cluster externalities and adequate firm-level combinative capabilities. In contrast to previous studies on this topic, the transition mechanism is not modeled as time-invariant. Instead, it is coupled to the prevailing macroeconomic regime.
    Keywords: macro-to-micro-transition,combinative capabilities,agglomeration economies,cluster-level externalities,unrelated variety,related variety,macroeconomic regimes,Great Recession,economic resilience
    JEL: C33 R11 R58
    Date: 2019
  3. By: Christian Duben (Hamburg University); Melanie Krause (Hamburg University)
    Abstract: We provide new insights on the city size distribution of countries around the world. Using geo-spatial data and a globally consistent city identification scheme, our data set contains 13,844 cities in 194 countries. City size is measured both in terms of population and night time lights proxying for local economic activity. We find that Zipf's law holds for many, but not all, countries in terms of population, while city size in terms of light is distributed more unequally. These deviations from Zipf's law are to a large extent driven by an undue concentration in the largest cities. They benefit from agglomeration effects which seem to work through scale rather than through density. Examining the cross-country heterogeneity in the city size distribution, our model selection approach suggests that historical factors play an important role, in line with the time of development hypothesis.
    Keywords: Cities, Zipf's Law, Urban Concentration, Geo-spatial Data.
    JEL: R11 R12 O18 C18
    Date: 2019–01
  4. By: Isabel Álvarez (Instituto Complutense de Estudios Internacionales (ICEI), Universidad Complutense de Madrid.); Cipriano Quirós (Instituto Complutense de Estudios Internacionales (ICEI), Universidad Complutense de Madrid.); Francisco J. Santos (Instituto Complutense de Estudios Internacionales (ICEI), Universidad Complutense de Madrid.)
    Abstract: The effects of open innovation strategies on the economic efficiency of firms is a topic often avoided, and about which little is known. This paper contributes to the exploration of that connection, revealing persistent collaboration and the embeddedness of firms within their environments to be two crucial aspects. Impacts on efficiency are conditioned by the type of external links employed, by the agents with whom a firm collaborates, and by the inherent differences between foreign and domestic firms. Findings obtained from fresh empirical evidence provided in this paper reveal that: 1) collaboration with competitors on innovation generates a direct effect on a firm’s efficiency, whether foreign or domestic; 2) only persistent and vertical linkages have a positive impact; and 3) access to complementary sources of knowledge becomes increasingly relevant to a rise in efficiency as a firm increases its embeddedness within a location, making institutional collaboration especially significant for domestic firms.
    Keywords: Open innovation; Collaboration; Efficiency of firms; Foreign firms; Embeddedness.
    Date: 2018
  5. By: Damiaan Persyn (European Commission - JRC); Jorge Diaz-Lanchas (European Commission - JRC); Javier Barbero (European Commission - JRC)
    Abstract: Transport costs are a crucial element of any spatial economic model. Surprisingly, good transport cost estimates at a detailed spatial level for the EU are not readily available. In this paper we address this issue by estimating a novel dataset of road freight transport costs for goods for the EU regions at the NUTS 2 level. In the spirit of the generalized transport cost (GTC) concept, we calculate the composite cost related to distance and time for the optimal route of a representative truck. We consider routes between large random samples of centroids drawn from a 1kmx1km population density grid. These transport costs are averaged to obtain an origin-destination cost matrix (in euros) at the region-pair level. The sampling approach also allows calculating the average transport cost within the regions. We separately report the corresponding iceberg transport costs for each pair of European regions, since this is the form of input required by many economic models. We also consider the effect of changes in the components of the GTC in order to evaluate transport policies. We set up a transport policy tool to assess the impact of road-transport infrastructure investment in a region by considering upgrading roads to highways. We apply this tool to study transport infrastructure investment through the European Cohesion Policy program 2014-2020.
    Keywords: Rhomolo, Region, Growth, Generalized Transport Costs, Infrastructure, Cohesion Policy, OSM, EU.
    JEL: R11 R12 R40 R41
    Date: 2019–03
  6. By: Békés, Gábor; Harasztosi, Péter
    Abstract: In less developed economies import can be the primary source of adopting new technologies in the form of modern production equipment. This paper explores the spread of manufacturing machinery across locations and investigates the effects of previous importers on the firms' decision to import certain types of foreign machines. Using a uniquely compiled Hungarian firm-level dataset for the 1992-2003 period, we find that the probability of importing a particular piece of sector specific machinery is positively affected by the presence of local firms previously importing the same machine. A similar pattern is found with regards to the choice of source country. While these results offer evidence of positive externalities, we find that these benefits are concentrated in large and foreign owned companies.
    Keywords: agglomeration; impact of technology adoption; machine imports; trade-related spillovers
    JEL: D22 F14 R12
    Date: 2019–03
  7. By: David Albouy; Alex Chernoff; Chandler Lutz; Casey Warman
    Abstract: We examine local labor markets in the U.S. and Canada from 1990 to 2011 using comparable household and business data. Wage levels and inequality rise with city population in both countries, albeit less in Canada. Neither country saw wage levels converge despite contrasting migration patterns from/to high-wage areas. Local labor demand shifts raise nominal wages similarly, although in Canada they attract immigrant and highly-skilled workers more, while raising housing costs less. Chinese import competition had a weaker negative impact on manufacturing employment in Canada. These results are consistent with Canada's more redistributive transfer system and larger, more-educated immigrant workforce.
    JEL: J21 J31 J61 N32 R12
    Date: 2019–03
  8. By: Florian Bonnet (ENS Paris Saclay - Ecole Normale Supérieure Paris-Saclay)
    Date: 2019–03–14
  9. By: Amine Ouazad; Romain Rancière
    Abstract: The price-amenity arbitrage is a cornerstone of spatial economics, as the response of land and house prices to shifts in the quality of local amenities and public goods is typically used to reveal households' willingness to pay for amenities. With informational, time, and cash constraints, households' ability to arbitrage across locations with different amenities (demographics, crime, education, housing) depends on their ability to compare locations and to finance the swap of houses. Arbitrageurs with deep pockets and better search and matching technology can take advantage of price dispersions and unexploited trade opportunities. We develop a disaggregated search and matching model of the housing market with endogenously bargained prices, identified on transaction-level data from the universe of deeds for 6,400+ neighborhoods of the Chicago metropolitan area, matched with school-level test scores and geocoded criminal offenses. Price-amenity gradients reflect preferences and the capitalization of trading opportunities, which are arbitraged away in the frictionless limit. Thus the time-variation in hedonic pricing coefficients partly reflects the time variation in search and credit frictions. Our model is able to explain that, between the peak of the housing boom and its trough, the sign of the price-amenity gradient flipped, due to the decline in trading opportunities in lower-amenity neighborhoods and due to the lower capitalization of trading opportunities in house prices.
    JEL: G12 G21 R21 R3 R31
    Date: 2019–03
  10. By: González-Val, Rafael; Pueyo, Fernando
    Abstract: In this paper we discuss the relationship between economic growth and natural resources at a global level, taking into account geography. With this aim, our model integrates elements of the theories of endogenous growth, natural resources and new economic geography. We find that an increase in the world growth rate can lead to a higher depletion of the natural resources following an increase in the world demand due to expansion in population. However, the consideration of geography and growth mechanisms make the relationship between growth and natural resources more complex, and can even lead to the opposite conclusion when the forces behind growth are different from world demand. Indeed, either a reduction in transport costs or an increase in R&D productivity appears to be able to generate a faster growth compatible with a lower depletion of natural resources.
    Keywords: Research Methods/ Statistical Methods
    Date: 2018–08–31
  11. By: Huning, Thilo; Wolf, Nikolaus
    Abstract: We analyze the foundation of the German Zollverein as an example of how geography can shape institutional change. We show how the redrawing of the European map at the Congress of Vienna 1815, notably Prussia's control over the Rhineland and Westphalia, affected the incentives for policymakers to cooperate. Our argument comes in three steps. First, we show that the new borders were not endogenous to trade. They were at odds with the strategy of Prussia in 1815, but followed from Britain's intervention at Vienna regarding the Polish-Saxon question. Second, we develop a theoretical framework, where state planners set tariffs on imports and transits to maximize revenue. We show that in a world with transit tariffs a revenue-maximizing state planner faces a trade-off between benefits from cooperation and the cost of losing geographical advantage. In a third step we calibrate the model combining historical data on prices, freight rates, and market sizes with GIS data on lowest costs routes under endogenous tariffs. We then run counterfactuals to show how borders affected incentives: if Prussia would have succeeded with her strategy to gain the entire Kingdom of Saxony instead of the western provinces, the Zollverein would not have formed. We conclude that geography can shape institutional change. To put it differently, as a collateral damage to her intervention at Vienna, Britain unifed Germany.
    Keywords: Customs Union; Economic Geography; Germany; Trade agreements; Transit Trade
    JEL: D74 F13 F15 F55 N73
    Date: 2019–03
  12. By: Fabrizio Guzzo (European Commission - JRC); Carlo Gianelle (European Commission - JRC); Elisabetta Marinelli (European Commission - JRC)
    Abstract: This paper illustrates the results of a survey on the Smart Specialisation experience across European regions and countries. By collecting and analysing the views of national and regional authorities, the survey intended to take stock of Smart Specialisation Strategies implementation, identify critical issues and challenges while drawing some lessons and recommendations in light of the debate on the post-2020 Cohesion Policy. Overall, despite being considered particularly challenging in terms of policy intelligence, skills and capabilities for public authorities and other stakeholders, Smart Specialisation experience is positively valued by the vast majority of respondents. Substantial improvements are detected with respect to: stakeholder engagement, priority setting, concentration of funding, level of trust and emergence of innovation potential; whereas, more efforts are needed in relation to the quality and effectiveness of monitoring activities and strategies’ outward-looking perspective. Further progress is still required as regards the policy regulatory framework, governance and institutional capabilities along with the involvement of relevant actors (notably SMEs and civil-society groups) who have remained at the margin of the decision making process thus far. With respect to the ultimate objective of the policy, national and regional actors are not observing significant progresses towards economic transformation yet. Respondents recommend to maintain the current policy framework for the future, while introducing new elements to improve strategies’ efficacy and make Smart Specialisation more responsive to the specific needs of different territories.
    Keywords: Regional innovation policy; Smart Specialisation; EU Cohesion policy
    JEL: O25 O30 R12 R58
    Date: 2018–11

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