nep-geo New Economics Papers
on Economic Geography
Issue of 2019‒04‒15
ten papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. New Economic Geography and the City By Gaigné, Carl; Thisse, Jacques-François
  2. On the Road (Again): Commuting and Local Employment Elasticities in Germany By Krebs, Oliver; Pflüger, Michael P.
  3. Do Firms Redline Workers? By Ana María Díaz; Luz Magdalena Salas; Luz Magdalena Salas
  4. Relatedness, Complexity and Local Growth By Davies, Benjamin; Maré, David C.
  5. How the 1906 San Francisco Earthquake Shaped Economic Activity in the American West By Philipp Ager; Katherine Eriksson; Casper Worm Hansen; Lars Lønstrup
  6. Time, space and hedonic prediction accuracy evidence from the Corsican apartment market By Yuheng Ling
  7. Allocating carbon responsibility: the role of spatial production fragmentation By Zengkai Zhang; ZhongXiang Zhang; Kunfu Zhu
  8. Human Capital and the Economic Convergence Mechanism: Evidence from China By Zhang, Xiaobei; Li, Haizheng; Wang, Xiaojun; Fleisher, Belton M.
  9. Implications of the Polish 1999 Administrative Reform for Regional Socio-Economic Development By Myck, Michal; Najsztub, Mateusz
  10. Do Tax Incentives Affect Business Location and Economic Development? Evidence from State Film Incentives By Button, Patrick

  1. By: Gaigné, Carl; Thisse, Jacques-François
    Abstract: In this chapter, we provide a bird-eye overview of recent developments in NEG within a unifying framework. We build on the idea that the difference in the economic performance of regions depend on the global and local interactions between and within regions through the locational decisions made by firms and households at the macro and microspatial levels. We also focus on settings that take into account the urban structure, the social and skill composition and the sectorial specialization of regional agglomerations, and the quality of urban life. Three types of spatial frictions are considered, that is, transport costs, commuting costs, and communication costs.
    Keywords: cities; Communication costs; Commuting costs; Land rent; manufacturing goods; new economic geography; Services; transport costs
    JEL: L12 O14 R12
    Date: 2019–04
  2. By: Krebs, Oliver (University of Tübingen); Pflüger, Michael P. (University of Würzburg)
    Abstract: This paper uses the quantitative spatial model with heterogeneous locations linked by costly goods trade, migration and commuting developed in Monte et al. (2018) to address the workings of local labor markets in Germany. One key contribution concerns the analysis of the role of the expenditure share of housing in the economy. We provide arguments that, in accordance with Rognlie (2015), for an economy-wide quantitative exercise, this share should be chosen lower than stipulated in much of the extant research. Our analyses show that the local general equilibrium employment and resident elasticities with respect to local productivity shocks are significantly higher with a lower housing share. Moreover, simple ex-ante observable commuting measures have very little predictive power for these general equilibrium elasticities when the housing share is small. The size of the housing share turns out to play no crucial role for two further results, however. First, employment and resident elasticities are very heterogeneous across German local labor markets, irrespective of the housing share. Second, the housing share has only little influence on the welfare effects and location patterns of counterfactual commuting cost reductions.
    Keywords: quantitative spatial analysis, commuting, migration, employment and resident elasticities
    JEL: F12 F14 R13 R23
    Date: 2019–03
  3. By: Ana María Díaz; Luz Magdalena Salas; Luz Magdalena Salas
    Abstract: Firms statistically discriminate (redline) against job candidates based on where they live. We conducted a correspondence test by sending three identical fictitious resumes to every non professional job offer posted in two main job vacancy newspapers in Bogota. The only difference between the resumes was the residential address in which the applicants lived. Two of the three resumes sent in each trio were located at the same commuting time (and geographical distance) from the job, but one resided in a low-crime neighborhood and the other in a high-crime neighborhood. The third resume was for a fictitious individual located in a low-crime neighborhood that is further away (longer commuting time and greater distance). Our experimental design allows us to explore whether employers discriminate against potential employees based on where they live, and if they do, which mechanisms are behind their discriminatory preferences. Building on the urban economics literature, we test two potential mechanisms: statistical discrimination due to negative signaling neighborhood effects and statistical discrimination based on commuting time to work. If any of these hold, we would expect employers to offer interviews to job applicants who reside in deprived or distant neighborhoods less often. We find that employers statistically discriminate (redline) based on commuting time to work. In particular, living one hour away from the vacancy reduces the callback rate by 32 percent while holding the attributes of the place of residence constant. We did not find evidence that employers respond to negative signaling effects or engages in taste based-discrimination.
    Keywords: statistical discrimination, productivity, employment, experiment, neighborhoods effects, spatial mismatch, correspondence test.
    JEL: C93 D22 J21 J23 J71 R23
    Date: 2019–02–25
  4. By: Davies, Benjamin (Motu Economic and Public Policy Research Trust); Maré, David C. (Motu Economic and Public Policy Research Trust)
    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
  5. By: Philipp Ager; Katherine Eriksson; Casper Worm Hansen; Lars Lønstrup
    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.
    JEL: N9 O15 O40 R11 R12
    Date: 2019–04
  6. By: Yuheng Ling (Laboratoire Lieux, Identités, eSpaces et Activités (LISA))
    Abstract: In this study, we propose a hedonic housing model to address spa- tial and temporal latent structures simultaneously. With the development of spatial econometrics and spatial statistics, economists can now better assess the impact of spatial correlation on house prices. How- ever, the simultaneous handling of spatial and temporal correlation is still under development. Since spatial econometric models are limited to account for two kinds of cor- relation simultaneously, we propose using a hierarchical spatiotemporal model from spatial statistics. Based on a Bayesian framework and a stochastic par- tial differential equation (SPDE) approach, the estimation is carried out via INLA. We then perform an empirical study on apartment transaction prices in Corsica (France) using the proposed model. The empirical results demonstrate that the prediction performance of the hierarchical spatiotemporal model is the best among all candidate models. Moreover, the hedonic housing estimates are affected by spatial effects and temporal effects. Ignoring these effects could result in serious forecasting issues.
    Keywords: Hierarchical spatiotemporal model · Hedonic price model · INLA-SPDE · Apartment market
    JEL: C11 C14 C33 R31
    Date: 2019–04
  7. By: Zengkai Zhang (College of Management and Economics, Tianjin University, China China Academy of Energy, Environmental and Industrial Economics, China); ZhongXiang Zhang (Ma Yinchu School of Economics, Tianjin University, China China Academy of Energy, Environmental and Industrial Economics, China); Kunfu Zhu (University of International Business and Economics, Beijing, China)
    Abstract: A number of studies have compared national carbon abatement responsibility under different carbon accounting schemes. However, the difficulty of the shift among different national carbon accounting schemes has rarely been quantitatively evaluated in the literature. Spatial production fragmentation over the recent decades has led to geographical separation among the primary inputs supplying regions, carbon emitting regions, and final consuming regions. The purpose of this paper is to reveal the effects of spatial production fragmentation on the shift from production-based to consumption-based and income-based national carbon accounting. Based on both demand- and supply-driven input-output analytical frameworks, this paper analyses the allocation of carbon responsibility for embodied and enabled emissions along production chains over the period 1995-2009. It was found that as much as 25% of embodied emissions and 20% of enabled emissions crossed national borders more than once in 2009. The shift among different carbon accounting schemes is not only related to the magnitude of trade related emissions but also related to border-crossing frequency associated with emissions embodied in or enabled by international trade. The increasingly fragmented production networks complicate the shift from production-based to consumption-based or income-based accounting and weaken the effectiveness of consumption-based or income-based accounting.
    Date: 2019–02
  8. By: Zhang, Xiaobei (Zhejiang University); Li, Haizheng (Georgia Tech); Wang, Xiaojun (University of Hawaii at Manoa); Fleisher, Belton M. (Ohio State University)
    Abstract: We examine the mechanism by which human capital affects economic growth and convergence, using provincial level panel data from China. We specify alternative measures of human capital and apply them to an enhanced growth model which we estimate parametrically, nonparametrically, and with a threshold model. Our results show that economic convergence is pronouncedly conditional on human capital across all our measures of human capital. The positive "benefit of being backward" due to lower initial income is almost trumped by the negative impact of low levels of human capital among the poorest areas.
    Keywords: human capital, economic convergence, regional economic development
    JEL: R11 O47 C33
    Date: 2019–03
  9. By: Myck, Michal (Centre for Economic Analysis, CenEA); Najsztub, Mateusz (Centre for Economic Analysis, CenEA)
    Abstract: On 1 January 1999, four major reforms took effect in Poland in the areas of health, education, pensions and local administration. After 20 years, only in the last case does the original structural design remain essentially unchanged. We examine the implications of this reform from the perspective of the distance of municipalities from their regional administrative capital. We show that despite fears of negative consequences for peripheral regions, the reform did not result in slower socio-economic development for those municipalities that found themselves further from the new administrative centres. We argue that regional inclusiveness in the process of development is likely to be an important factor behind the stability of Poland's administrative design.
    Keywords: regional development, administrative reform, distance to capitals, differences in differences
    JEL: P30 R11 R50
    Date: 2019–03
  10. By: Button, Patrick (Tulane University)
    Abstract: I estimate the impacts of recently-popular U.S. state film incentives on filming location, film industry employment, wages, and establishments, and spillover impacts on related industries. I compile a detailed database of incentives, matching this with TV series and feature film data from the Internet Movie Database (IMDb) and Studio System, and establishment and employment data from the Quarterly Census of Employment and Wages and Country Business Patterns. I compare these outcomes in states before and after they adopt incentives, relative to similar states that did not adopt incentives over the same time period (a panel difference-in-differences). I find that TV series filming increases by 6.3 to 55.4% (0.67 to 1.50 additional TV series) after incentive adoption. However, there is no meaningful effect on feature films, and employment, wages, and establishments in the film industry and in related industries. These results show that the ability for tax incentives to affect business location decisions and economic development is mixed, suggesting that even with aggressive incentives, and "footloose" filming, incentives can have little impact.
    Keywords: economic development, tax incentives, state taxation, business location, film industry
    JEL: H25 H71 R38 L82 Z11
    Date: 2019–03

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