nep-geo New Economics Papers
on Economic Geography
Issue of 2019‒05‒27
eight papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Tales of the City: What Do Agglomeration Cases Tell Us About Agglomeration in General? By Giulia Faggio; Olmo Silva; William C. Strange
  2. Place-Based Innovation Ecosystems: Boston-Cambridge Innovation Districts (USA) By Carmelina Bevilacqua; Bruno Monardo; Claudia Trillo
  3. Regional employment effects of MNE offshoring By Eliasson, Kent; Hansson, Pär; Lindvert, Markus
  4. The Pure Effect of Social Preferences on Regional Location Choices: The Evolving Dynamics of Convergence to a Steady State Population Distribution By Stark, Oded; Budzinski, Wiktor; Kosiorowski, Grzegorz
  5. Estimation of Regional Transition Probabilities for Spatial Dynamic Microsimulations from Survey Data Lacking in Regional Detail By Jan Pablo Burgard; Joscha Krause; Simon Schmaus
  6. Borrowing constraints and location choice - Evidence from the Paris Region By Sophie Dantan; Nathalie Picard
  7. Regional resilience in China: The response of the provinces to the growth slowdown By Anping Chen; Nicolaas Groenewold
  8. Partial ownership of local firms and zoning of neighboring towns By Bárcena Ruiz, Juan Carlos; Casado Izaga, Francisco Javier

  1. By: Giulia Faggio; Olmo Silva; William C. Strange
    Abstract: This paper considers the heterogeneous microfoundations of agglomeration economies. It studies the co-location of industries to look for evidence of labor pooling, input sharing, and knowledge spillovers. The novel contribution of the paper is that it estimates single-industry models using a common empirical framework that exploits the cross-sectional variation in how one industry co-locates with the other industries in the economy. This unified approach yields evidence on the relative importance of the Marshallian microfoundations at the single-industry level, allowing for like-for-like cross-industry comparisons on the determinants of agglomeration. Using UK data, we estimate such microfoundations models for 97 manufacturing sectors, including the classic agglomeration cases of automobiles, computers, cutlery, and textiles. These four cases - as with all of the individual industry models we estimate - clearly show the importance of the Marshallian forces. However, they also highlight how the importance of these forces varies across industries - implying that extrapolation from cases should be viewed with caution. The paper concludes with an investigation of the pattern of heterogeneity. The degree of an industry's clustering (localization), dynamism, incumbent firm size, and worker education are shown to contribute to the pattern of heterogeneous microfoundations.
    Keywords: agglomeration, microfoundations, heterogeneity, industrial clusters
    JEL: R10 R12 L52 L60
    Date: 2019–05
  2. By: Carmelina Bevilacqua; Bruno Monardo; Claudia Trillo
    Abstract: This report focuses on the case study of the Boston area and allows identifying key success factors in the Boston regional innovation ecosystem. It discusses how the macro-innovation eco-ecosystem is composed by a variety of interconnected micro-innovation eco-systems, mutually reinforcing each other and making the entire “territorial†system successful. The spatial configuration of these micro-innovation ecosystems at the urban scale has been specifically investigated, thus leading to theorize that the Innovation District may act as enabler for place-based innovation. Evidence from the Boston case study shows that there is not a single magic recipe for the successful implementation of place-based and social innovation-driven strategies. On the contrary, the variety of place-grounded combinations of micro and macro initiatives, embedded in the social and spatial fine grain of places and encompassing a diversity of actors, can create the conditions enabling places to thrive and local economic activities to grow in a sustainable way.
    Keywords: Place-based, innovation ecosystems, social innovation, innovation districts, US, USA, Boston, S3, Smart Specialisation, territorial system, spatial configuration
    Date: 2019–04
  3. By: Eliasson, Kent (Swedish Agency for Growth Policy Analysis); Hansson, Pär (Örebro University School of Business); Lindvert, Markus (Swedish Agency for Growth Policy Analysis)
    Abstract: The employment in Sweden has become more concentrated to the larger cities in Sweden (Stockholm, Göteborg and Malmö). This paper investigates whether Swedish multinational enterprises (MNEs) have contributed to that development. We examine the association between offshoring within Swedish MNEs and changes their parent employment at regional level (in local labor market regions, LA-regions). The relation may vary depending on: (i) the characteristics of the region (large city, regional center or other region) or (ii) the type of labor (skilled or less-skilled) or the type of job (routine or non-routine) in the parent. Our results reveal large spatial heterogeneities in the relationships between MNE offshoring and onshore employment in various regions. The results suggest that MNE offshoring might be a factor contributing to diverging onshore employment among Swedish regions; increased (unchanged) employment in larger cities and unchanged (decreased) employment in regional centers and other regions. Moreover, MNE offshoring seems to contribute to increased localization of skilled activities and non-routine tasks to larger cities. We use enterprise data on employment in the parents and the affiliates overseas in Swedish controlled enterprise groups with affiliates abroad (Swedish MNEs). Parent employment data are available for different regions in Sweden, skilled and less-skilled labor, as well as for various occupations.
    Keywords: multinational enterprises (MNEs); offshoring; local labor markets; skilled and lessskilled employment; routine and non-routine and jobs
    JEL: F14 F16 F23 J23 J24
    Date: 2019–05–09
  4. By: Stark, Oded (University of Bonn); Budzinski, Wiktor (University of Warsaw); Kosiorowski, Grzegorz (Cracow University of Economics)
    Abstract: This paper tracks the consequences of individuals' desire to align their location with their social preferences. The social preference studied in the paper is distaste for relative deprivation, measured in a cardinal manner. Location is conceived as social space, with individuals choosing to relocate if, as a result, their relative deprivation will be reduced, holding their incomes constant. Conditions are provided under which the associated dynamics reaches a spatial steady state, the number of periods it takes to reach a steady state is specified, and light is shed on the robustness of the steady state outcome. By way of simulation it is shown that for large populations, a steady state of the relocation dynamics is almost always reached, typically in one period, and that cycles are more likely to occur when the populations' income distributions are more equal.
    Keywords: social preferences, distaste for low relative income, a cardinal measure of income relative deprivation, interregional locational choices, relocation dynamics, steady-state spatial distribution
    JEL: C62 C63 R12 R13 Z13
    Date: 2019–05
  5. By: Jan Pablo Burgard; Joscha Krause; Simon Schmaus
    Abstract: Spatial dynamic microsimulations allow for the multivariate analysis of complex socio- economic systems with geographic segmentation. For this, a synthetic replica of the system as base population is stochastically projected into future periods. Thereby, the projection is based on micro-level transition probabilities. They need to accurately represent the characteristic dynamics of the system to allow for reliable simulation outcomes. In practice, transition probabilities are unknown and must be estimated from suitable survey data. This can be challenging when the characteristic dynamics vary locally. Survey data often lacks in regional detail due to confidentiality restrictions and limited sampling resources. In that case, transition probability estimates may misrepresent local dynamics as a result of insufficient local observations and coverage problems. The simulation process then fails to provide an authentic evolution. We present two transition probability estimation techniques that account for regional heterogeneity when the survey data lacks in regional detail. Using methods of constrained optimization and ex-post alignment, we show that local micro level transition dynamics can be accurately recovered from aggregated regional benchmarks. The techniques are compared in theory and subsequently tested in a simulation study.
    Keywords: Constrained Maximum Likelihood, Logit Scaling, Spatiotemporal Modelling, Regional Benchmark
    Date: 2019
  6. By: Sophie Dantan; Nathalie Picard (Université de Cergy-Pontoise, THEMA)
    Abstract: This paper investigates the determinants of residential segregation using a nested logit model to disentangle household preferences for local amenities, for dwelling type and for homeownership. The model is extended to account for unobservable borrowing constraints which might prevent some households from purchasing a dwelling. A counterfactual distribution of socio-demographic characteristics across the Paris region is then built by relaxing those constraints. The comparison of the actual and counterfactual distributions suggests that if their credit constraints were alleviated, households would tend to locate further from Paris. In particular if constraints were relaxed only on the poorest households, they would not be likely to mix with the richest households.
    Keywords: Homeownership, Tenure choice, Borrowing constraints, Residential segregation, Suburbanization, Urban sprawl, Location choice model, Endogenous choice sets.
    JEL: R21 R23 R31
    Date: 2019
  7. By: Anping Chen (School of Economics, Jinan University); Nicolaas Groenewold (Economics Discipline, Business School, The University of Western Australia)
    Abstract: Since 2007 China’s real GDP growth rate has slowed from a level of over 10% per annum to below 7%. Given China’s regional diversity, an important aspect of the slowdown is the possible spatial variation in its experience. This is the issue we consider in this paper and we analyse this question in the context of the regional economic resilience framework. We proceed in two stages. In the first we analyse a measure of provincial slowdown (a sensitivity index) based just on growth rates and use cross-section regressions to investigate the determinants of this index, using a range of provincial characteristics common in the resilience literature. We find that economic structure, demographic factors and education all play a role, although with signs that are often at odds with the existing literature. In the second stage we decompose regional growth rates into national and province-specific components using a VAR model and argue that since resilience concerns the response of provinces to a national shock, it is properly analysed using just the national component of the growth rate rather than the growth rate as such. We therefore analyse a sensitivity index based just on the national component of growth and find many differences between the two sets of results. Using the second index matters for the determinants which are significant as well as for the magnitude of their coefficients. It appears that some of the influences found to be significant in the first stage are there only because of their influence on growth via the province-specific component of the growth rate and in this sense are spurious.
    Keywords: China, growth, provincial growth, provincial response, regional resilience
    JEL: E37 O47 O53 R12 R15
    Date: 2019
  8. By: Bárcena Ruiz, Juan Carlos; Casado Izaga, Francisco Javier
    Abstract: This paper investigates zoning in two neighboring towns in which firms are owned by investors that reside in the two towns. We find that local regulators use zoning strategically depending on the weight of local profits in social welfare. When they are high enough both towns are zoned. For intermediate values an asymmetric result emerges: only one regulator resorts to zoning despite the symmetry in the percentage of ownership of the neighboring firms. For a low weight of local profits, towns may or may not be zoned. Zoning restrictions on the location of firms are tighter when local profits are more significant for social welfare.
    Keywords: zoning, spatial, competition, foreign, ownership, location, choice
    JEL: L13 R32 R38
    Date: 2019–03–27

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