nep-geo New Economics Papers
on Economic Geography
Issue of 2019‒05‒13
eleven papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Institutional change and the development of lagging regions in Europe By Andrés Rodríguez-Pose; Tobias Ketterer
  2. Industrial agglomeration in Myanmar By Rand John; Tarp Finn; Trifkovi? Neda; Zille Helge
  3. Housing, urban growth and inequalities: The limits to deregulation and upzoning in reducing economic and spatial inequality By Andrés Rodríguez-Pose; Michael Storper
  4. Do High-Quality Local Institutions Shape Labour Productivity in Western European Manufacturing Firms? By Ganau, Roberto; Rodríguez-Pose, Andrés
  5. Rural roads and urban agglomeration economies: Benefits for town and country? By Bell Clive
  6. Local development, urban economies and aggregate growth By Antonio Accetturo; Andrea Lamorgese; Sauro Mocetti; Paolo Sestito
  7. The dynamics of spatial and local inequalities in India By Mukhopadhyay Abhiroop; Urzainqui David; Urzainqui David
  8. Education and Geographical Mobility: The Role of Wage Rents By Michael Amior
  9. The geography of Italian income inequality: recent trends and the role of employment By Emanuele Ciani; Roberto Torrini
  10. Anything new in town? The local effects of Urban Regeneration Policies in Italy By Giuseppe Albanese; Emanuele Ciani; Guido de Blasio
  11. Political Geography and Pre-Industrial Development: A Theory and Evidence for Europe 1000-1850 By Cervellati, Matteo; Lazzaroni, Sara; Prarolo, Giovanni; Vanin, Paolo

  1. By: Andrés Rodríguez-Pose; Tobias Ketterer
    Abstract: In this paper we assess whether both the levels and the degree of change in government quality influence regional economic performance in the European Union (EU) and, in particular, in its lagging regions. The results of the econometric analysis, covering 249 NUTS2 regions for the period between 1999 and 2013, suggest that: a) government quality matters for regional growth; b) relative improvements in quality of government are a powerful driver of development; c) one-size-fits-all policies for lagging regions are not the solution; d) government quality improvements are essential for low growth regions; and e) in low income regions basic endowment shortages are still the main barrier to development. In particular, low growth regions in Southern Europe stand to benefit the most from improvements in government quality, while in low income regions of Central and Eastern Europe, investments in the traditional drivers of growth remain the main factors behind successful economic trajectories.
    Keywords: Economic growth, government quality, institutional change, regions, EU
    JEL: R11 R50
    Date: 2019–05
  2. By: Rand John; Tarp Finn; Trifkovi? Neda; Zille Helge
    Abstract: Focusing on labour productivity and working conditions, we investigate the benefits of industrial zones for private manufacturing enterprises in Myanmar.We find that being located in an industrial zone associates with higher labour productivity. Value added gains, however, are not transferred to employees. The results are robust to different measures of productivity and model specifications, as well as to controlling for the natural level of industrial agglomeration in a particular location.The findings in general indicate additional benefits of planned industrial activities as opposed to naturally driven industrial clustering.
    Keywords: Working conditions,Agglomeration,industrial zones
    Date: 2019
  3. By: Andrés Rodríguez-Pose; Michael Storper
    Abstract: A growing amount of research explores how the allocation of regional development monies follows electoral reasons. Yet, the existing literature on distributive politics provides different and contrasting expectations on which geographical areas will be targeted. We focus on proportional representation (PR) systems. While in such settings governments have incentives to target core districts and punish foes', we suggest that when incumbents attempt to build a state-party image they may broaden the territorial allocation of benefits and even target opposition out-groups. We exploit data on Turkey's public transport investment for the period 2003-2014 and in-depth interviews to provide results in support of our hypothesis.
    Keywords: Cities, housing, regulation, urban planning, economic growth, inequality, migration
    JEL: D63 O18 R21 R23 R31
    Date: 2019–05
  4. By: Ganau, Roberto; Rodríguez-Pose, Andrés
    Abstract: We investigate the extent to which regional institutional quality shapes firm labour productivity in western Europe, using a sample of manufacturing firms from Austria, Belgium, France, Germany, Italy, Portugal and Spain, observed over the period 2009-2014. The results indicate that regional institutional quality positively affects firms' labour productivity and that government effectiveness is the most important institutional determinant of productivity levels. However, how institutions shape labour productivity depends on the type of firm considered. Smaller, less capital endowed and high-tech sectors are three of the types of firms whose productivity is most favourably affected by good and effective institutions at the regional level.
    Keywords: Cross-Country Analysis; labour productivity; Manufacturing firms; Regional Institutions; Western Europe
    JEL: C23 D24 H41 R12
    Date: 2019–04
  5. By: Bell Clive
    Abstract: Do urban agglomeration economies enhance the social profitability of rural roads? When all goods are traded at parametric world prices, lower transport costs benefit villagers. Urban activities and welfare are unaffected if labour is immobile, but their levels fall when rural workers move freely to take up urban jobs while remaining members of their extended families.In a closed, two-good economy with mobile labour, the effects of agglomeration economies depend on the substitutability of rural and urban goods. With a Cobb–Douglas rural technology, aggregate benefits are substantially greater in the presence of empirically plausible elasticities of agglomeration economies when preferences are Cobb–Douglas and urban households’ tastes for urban goods are somewhat stronger than those of rural households.When the goods are rather poor substitutes, these enhancing effects are quite small. In an open economy with a single nontradeable whose production is relatively labour-intensive, improved rural roads will likely induce a fall in urban welfare in the presence of agglomeration economies, even with Cobb–Douglas preferences and immobile labour.
    Keywords: Rural roads,Cost of operation (Transportation),Agglomeration,Benefit programmes
    Date: 2018
  6. By: Antonio Accetturo (Bank of Italy); Andrea Lamorgese (Bank of Italy); Sauro Mocetti (Bank of Italy); Paolo Sestito (Bank of Italy)
    Abstract: The paper provides an overview of the results of a recent research project by the Bank of Italy on “Local development, urban economies and aggregate growth”. The paper documents the interplay between historical origins, congestion costs, and agglomeration benefits in shaping the Italian urban system. It shows that urban agglomeration externalities (on wages, productivity, or innovation) tend to be smaller in Italy than in other developed countries; it also shows that the costs of congestion are relatively high and that housing costs discourage mobility. These features might have negative consequences on the country’s ability to grow.
    Keywords: economic growth, agglomeration, congestion costs, urban premium
    JEL: O10 R10 R30
    Date: 2019–04
  7. By: Mukhopadhyay Abhiroop; Urzainqui David; Urzainqui David
    Abstract: Studies of the spatial dimensions of inequality in developing countries are mostly restricted to states, provinces, or districts, typically the smallest geographical units for which data are representative in national surveys.We introduce a procedure to calculate inequality between and within smaller spatial units in the context of India, taking advantage of census and satellite data available for a large number of characteristics at the level of the village and the urban sub-district (block). Using prediction models based on those characteristics and estimated at the district level, we impute average per capita consumption expenditure for villages and urban blocks in 2004 and 2011. These imputations allow us to calculate (spatial) inequality between villages and blocks and to derive (local) inequality within these spatial units.We find that the divergence observed for states and districts is not amplified at lower levels of disaggregation. Hence, the increase in inequality in urban India is mostly due to rising inequality within urban blocks. Neither rural inequality nor its local and spatial components have changed much at the national level, but there is substantial heterogeneity between states and across poor and rich districts. Finally, we find that urbanization, growth of employment, and ‘good’ jobs may be moving hand in hand with falling spatial inequalities but rising local inequalities. On the other hand, the expansion of literacy and access to banking and sanitation are linked to lower rises in inequality.
    Keywords: Decomposition,Inequality,Spatial inequality
    Date: 2018
  8. By: Michael Amior
    Abstract: Geographical mobility is known to be crucial to the adjustment of local labor markets. But there is severe inequity in the incidence of mobility: better educated Americans make many more long-distance moves. I argue this is a consequence of larger wage offer dispersion, independent of geography. In a thin labor market, this generates larger wage rents (in excess of workers' reservations) in new job matches, particularly for younger workers who are just beginning their careers. If an offer happens to arrive from a distant location, these larger rents are more likely to justify the cost of moving - even if the offer distribution is invariant geographically. Also, local job creation will elicit a larger migratory response. I motivate my claims with new evidence on mobility patterns and subjective moving costs. And I test my hypothesis by estimating wage returns to local and long-distance job matching over the jobs ladder. Though I focus on education differentials, this paper offers new insights for understanding geographical immobility more generally.
    Keywords: geographical mobility, job matching, education
    JEL: J61 J64 R23
    Date: 2019–05
  9. By: Emanuele Ciani (Bank of Italy); Roberto Torrini (Bank of Italy)
    Abstract: We reassess the role of regional imbalances in explaining the high household income inequality in Italy. In the first part of the work we use the Survey of Household Income and Wealth (SHIW) to describe the trends in income inequality between and within areas since the early 2000s. We illustrate that the between-area inequality has been relatively stable, while the within-area component increased significantly after the recession and during the recovery. In 2016, the large geographical divide and the higher inequality within the South contributed to almost one fifth of national inequality. In the second part we show that the distribution of employment is key in explaining the regional differences in both average income and its dispersion. By means of simulations based on matching and reweighting, we estimate that national inequality would be reduced by 15 per cent if the distribution of work hours across southern households was similar to the one in the more developed Centre-North. Regional employment differentials are so important in determining overall inequality that income dispersion would decline substantially even if this increase in employment was associated with a drop in southern regions’ average wages.
    Keywords: inequality, North-South divide, work intensity
    JEL: D63 R10 J21
    Date: 2019–04
  10. By: Giuseppe Albanese (Bank of Italy); Emanuele Ciani (Bank of Italy); Guido de Blasio (Bank of Italy)
    Abstract: The paper estimates the local effects of urban regeneration policies by using evidence from interventions that took place in small and medium-sized cities in the Centre and North of Italy over the period 2008-12. By using an Oaxaca-Blinder reweighting estimator, we find little support for the idea that urban regeneration projects could stimulate local economic growth in the short to medium term. Only the largest scale interventions that focused on improving the public realm seem to have led to an increase in house prices, but they have had no impact on other economic outcomes.
    Keywords: urban regeneration, house prices, reweighting
    JEL: R58 R11 O18
    Date: 2019–04
  11. By: Cervellati, Matteo; Lazzaroni, Sara; Prarolo, Giovanni; Vanin, Paolo
    Abstract: We present a theory of the drivers, and a measurement of the patterns, of the evolution of historical sovereign polities over time and space in Europe, and we study their impact on pre-industrial urban development. We model changing state capacity and rule of law over space as resulting from strategic interactions between ruling elites. We characterize the endogenous evolution of equilibrium number, size, borders and type of polities. The framework characterizes the timing and location of appearance (and disappearance) of city states and the transition from domain reigns to modern territorial states. The model predicts the emergence of hard borders and a reversal in the role of locations' centrality for development. We measure the territorial evolution of sovereign polities by assembling geo-referenced yearly panel data on the political geography of each location in Europe for the period 1000-1850 and we investigate its implications for pre-industrial urban growth. Results document a changing role of polity size and type and a reversal of centrality from across to within polities which is associated to increasing importance of domestic market potential after the XVII century.
    Keywords: Borders; Centrality and Location; market potential; Pre-Industrial Development; Sovereign Polities; Space and Territorial Control
    Date: 2019–05

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