nep-geo New Economics Papers
on Economic Geography
Issue of 2020‒03‒02
fourteen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Is innovation (increasingly) concentrated in large cities? An international comparison By Michael Fritsch; Michael Wyrwich
  2. Recent Employment Growth in Cities, Suburbs, and Rural Communities By Benjamin K. Couillard; Christopher L. Foote
  3. Modeling inter-regional patient mobility: Does distance go far enough? By Anna-Theresa Renner; Dieter Pennerstorfer
  4. Does Successful Innovation Require Large Urban Areas? Germany as a Counterexample By Michael Fritsch; Michael Wyrwich
  5. Optimal location of economic activity and population density: The role of the social welfare function By Raouf Boucekkine; Giorgio Fabbri; Salvatore Federico; Fausto Gozzi
  6. Quality Differentiation and Spatial Clustering among Restaurants By Mossay, Pascal; Shin, Jong Kook; Smrkolj, Grega
  7. Economic Effects of Transportation Infrastructure Quantity and Quality: A Study of German Counties By Dennis Gaus; Heike Link
  8. Location, Location, Location Revisited : Evidence from Antananarivo, Madagascar By Iimi,Atsushi
  9. Temporary Trade Shocks, Spatial Reallocation, and Persistence in Developing Countries : Evidence from a Natural Experiment in West Africa By Emran,M. Shahe; Shilpi,Forhad J.; Coulombe,Harold; Blankespoor,Brian
  10. Pulled or pushed? The spatial diffusion of wind energy between local demand and supply By Marcel Bednarz; Tom Broekel
  11. Essential ingredients for radical innovations? The role of (un-)related variety and external linkages in Germany By Kolja Hesse; Dirk Fornahl
  12. Ease vs. Noise: Long-run changes in the value of transport (dis)amenities By Nitsch, Volker; Ahlfeldt, Gabriel M.; Wendland, Nicolai
  13. Agglomeration, Urbanization and Employment growth in Ghana : Evidence from an industry-district panel By Kerr,Andrew Nicholas; McDougall,Bruce
  14. Spatial Population Data and Disclosure Avoidance By James Gaboardi

  1. By: Michael Fritsch; Michael Wyrwich
    Abstract: We investigate the geographic concentration of patenting in large cities using a sample of 14 developed countries. There is wide dispersion of the share of patented inventions in large metropolitan areas. South Korea and the US are two extreme outliers where patenting is highly concentrated in large cities. We do not find any general trend that there is a geographic concentration of patents for the period 2000-2014. There is also no general trend that inventors in large cities have more patents than in rural areas (scaling). Hence, while agglomeration economies of large cities may offer advantages for innovation activities, the extent of these advantages is not very large. We conclude that popular theories over-emphasize the importance of large cities for innovation activities.
    Keywords: innovation, patents, cities, urban scaling, creativity
    JEL: O31 R12 O57
    Date: 2020–02
  2. By: Benjamin K. Couillard; Christopher L. Foote
    Abstract: This paper uses a comprehensive source of yearly data to study private-sector labor demand across US counties during the past five decades. Our focus is on how employment levels and earnings relate to population density—that is, how labor markets in rural areas, suburbs, and cities have fared relative to one another. Three broad lessons emerge. First, the longstanding suburbanization of employment and population in cities with very dense urban cores essentially stopped in the first decade of the 21st century. For cities with less dense cores, however, the decentralization of employment continues, even as population patterns mimic those of denser areas. Second, a dataset that begins in 1964 clearly shows the decentralization of manufacturing employment away from inner cities, a trend that has long been a focus of the urban sociological literature. Starting in the 1990s, however, manufacturing employment fell sharply, not just in cities but also in rural areas, which had experienced less-intense deindustrialization before then. Finally, average earnings dispersion across counties with similar density levels fell during most of our sample period. But after the 1990s, this dispersion rose, probably because of an increase in earnings dispersion among very dense counties (“superstar cities”). We also note that our results are consistent with explanations of rising individual-level earnings inequality within cities that rest on fundamental changes in how basic job tasks are performed, rather than where particular jobs are located.
    Keywords: demographics; labor economics; economic geography; location economics; real estate economics; regional economics; spatial econometrics
    JEL: J2 J3 J6 R1 R3
    Date: 2019–12–01
  3. By: Anna-Theresa Renner; Dieter Pennerstorfer
    Abstract: Gravity models are extremely popular to investigate economic interactions across space. Bilateral flows are usually available as regionally aggregated data only, while information on demand and supply is often available at a finer spatial scale. We suggest using this information to calculate a measure of spatial accessibility based on the two-step floating catchment area method to augment the gravity equation. We apply this idea to analyze patient mobility by using easily available and spatially explicit information on physicians' locations (supply) and grid-level population data (demand). Our approach improves the model’s fit and allows conducting a rich set of simulation experiments.
    Keywords: gravity model, patient mobility, spatial accessibility, two-step floating catchment areas (2SFCA)
    JEL: F10 R12 I11 I18
    Date: 2020–02
  4. By: Michael Fritsch; Michael Wyrwich
    Abstract: Popular theories claim that innovation activities should be located in large cities because of more favorable environmental conditions that are absent in smaller cities or remote and rural areas. Germany provides a clear counterexample to such theories. We argue that a main force behind the geography of innovation in Germany is the country’s federal tradition that has shaped the settlement structure, the geographic distribution of universities and public research institutions, as well as local access to finance. Additional factors that may play a role in this respect are the system of education and the tax treatment of inheriting a business. We demonstrate the long-lasting effect of the historical political structure and distribution of knowledge sources on innovation activities today. We conclude that historical factors that shape the settlement structure and location of knowledge sources are of key importance for the geographic location of innovation activities.
    Keywords: innovation, patents, agglomeration economies, cities, Germany
    JEL: O31 R11 L26
    Date: 2020–02
  5. By: Raouf Boucekkine (Aix-Marseille Univ, CNRS, EHESS, Ecole Centrale, IMERA & AMSE, Marseille, France); Giorgio Fabbri (Univ. Grenoble Alpes, CNRS, INRA, Grenoble INP, GAEL, 38000 Grenoble); Salvatore Federico (Universita degli Studi di Siena, Dipartimento di Economia Politica e Statistica, Siena, Italy); Fausto Gozzi (Dipartimento di Economia e Finanza, LUISS Guido Carli, Rome, Italy)
    Abstract: In this paper, we consider a spatiotemporal growth model where a social planner chooses the optimal location of economic activity across space by maximization of a spatiotemporal utilitarian social welfare function. Space and time are continuous, and capital law of motion is a parabolic partial differential diffusion equation. The production function is AK. We generalize previous work by considering a continuum of social welfare functions ranging from Benthamite to Millian functions. Using a dynamic programming method in infinite dimension, we can identify a closed-form solution to the induced HJB equation in infinite dimension and recover the optimal control for the original spatiotemporal optimal control problem. Optimal stationary spatial distributions are also obtained analytically. We prove that the Benthamite case is the unique case for which the optimal stationary detrended consumption spatial distribution is uniform. Interestingly enough, we also find that as the social welfare function gets closer to the Millian case, the optimal spatiotemporal dynamics amplify the typical neoclassical dilution population size effect, even in the long-run.
    Keywords: spatiotemporal growth models, Benthamite vs Millian social welfare functions, imperfect altruism, diffusion, dynamic programming in infinite dimension
    JEL: R1 O4 C61
    Date: 2020–02
  6. By: Mossay, Pascal; Shin, Jong Kook; Smrkolj, Grega
    Abstract: To explore the relationship between spatial location and quality differentiation, we build a dataset of over 30,000 restaurants rated by TripAdvisor, across large UK cities. Whereas top-rated restaurants tend to locate closer to other top restaurants, bottom-rated restaurants tend to locate away from each other and closer to top ones. Our theoretical model can explain the main features of the observed spatial patterns. We find that an increase in the population density in the city center reduces the spatial dispersion of both top and bottom restaurants but the reduction is larger in magnitude for top restaurants. A larger quality difference between top and bottom restaurants increases both the absolute and relative dispersion of top restaurants.
    Keywords: Spatial competition, Quality differentiation, Hotelling, Restaurant industry
    JEL: L13 L83 R32
    Date: 2020–02–18
  7. By: Dennis Gaus; Heike Link
    Abstract: In this paper, we analyze the impact of transportation infrastructure quantity and quality on regional economic production. We exploit an extensive panel dataset on the German county level (N=401), expressing the capital value and condition of highways between 2007 and 2016, to estimate a spatially extended translog production function. The spatial specification uses SLX and SDEM models, with various linear and nonlinear variants estimated using FGLS and GMM estimators accounting for endogeneity. We find, in line with existing research, a positive impact of the quantity of transport infrastructure both locally and supra-regionally. We furthermore provide evidence for the claim that insufficient maintenance and low infrastructure conditions significantly slow economic growth through a negative correlation between GDP and the quality grade of highways. A more detailed analysis, distinguishing different types of highways and constructions, confirms these findings and underlines the importance of the Bundesstraßen network as compared to the Autobahn system. The estimated impact of the quality of bridges is rather ambiguous and requires further research to achieve a better understanding.
    Keywords: Transport; Infrastructure; Public Capital; Economic Growth; Regional Development
    JEL: O18 R12 R42
    Date: 2020
  8. By: Iimi,Atsushi
    Abstract: Understanding how land prices are determined is of particular importance for policy makers; however, there is little evidence in African countries, which are currently experiencing rapid urbanization. The paper examines the relationship between land prices and locational characteristics using data from Antananarivo, the capital of Madagascar. It is found that the land value gradients are relatively steep, indicating that the land and housing prices tend to overshoot in the middle of the city, pushing the poor away from the city to suburban areas. It is also found that access to transport infrastructure and services, such as minibuses, is an important determinant of land value. Not only transport connectivity, but also other factors, such as proximity to amenities and administrative centers, are found to be important. Better land management and urban transport policies are called for to promote these aspects in the city.
    Keywords: Transport Services,Urban Housing and Land Settlements,Urban Housing,Urban Governance and Management,Municipal Management and Reform,Natural Disasters
    Date: 2019–08–06
  9. By: Emran,M. Shahe; Shilpi,Forhad J.; Coulombe,Harold; Blankespoor,Brian
    Abstract: In response to rising inequality following decades of trade liberalization, many countries are adopting trade restrictions. Can temporary trade restrictions have long-lasting effects on the spatial distribution of employment and resource allocation? To analyze this, this paper exploits the civil war in Côte d'Ivoire (2002-07), which disrupted access to the world market for two neighboring landlocked countries: Mali and Burkina Faso. The Ivorian war forced rerouting of trade from the Abidjan route to non-Abidjan routes. This paper builds a general equilibrium model where a subsistence-based autarkic hinterland coexists with an integrated segment, and there are two alternative routes to international markets. A trade shock to one route affects resource allocation in both routes by shifting the spatial margins of market integration and sectoral specialization. The effects are heterogeneous, depending on the pre-war market access of a location. The empirical analysis takes advantage of panel data and estimates the effects on structural change in employment on the non-Abidjan route using a triple difference design with location fixed effects. The areas that remain in autarkic equilibrium before and after the trade shock provide plausible estimates of the changes arising from long-term factors unrelated to the trade shock. The estimates show that the temporary trade shock created divergence between the Abidjan and non-Abidjan routes, with accelerated structural change in favor of manufacturing and services employment in the non-Abidjan route. This paper finds evidence of persistence in the effects through higher sunk investment in built-up density, agglomeration through concentration of skilled labor and greater public investment in complementary inputs such as electricity infrastructure (measured by nightlights density).
    Keywords: International Trade and Trade Rules,Construction Industry,Common Carriers Industry,Food&Beverage Industry,General Manufacturing,Pulp&Paper Industry,Textiles, Apparel&Leather Industry,Plastics&Rubber Industry,Business Cycles and Stabilization Policies,Armed Conflict,Transport Services,Food Security
    Date: 2019–08–06
  10. By: Marcel Bednarz; Tom Broekel
    Abstract: This paper contributes to and connects the literature on spatial innovation diffusion, entre-preneurship, and industry life-cycles by disentangling the relevance of local demand and sup-ply in the adoption of wind energy production. More precisely, we evaluate the strength of local supply-push effects with those of local demand-pull over the course of the evolution of an industry and its main product evolution. By using Bayesian survival models with time-dependent data of wind turbine deployment and firm foundation for 402 German regions between the years 1970 and 2015, we show that the spatial evolution of the German wind energy industry was more strongly influenced by local demand-pull than local supply-push processes. New producers are found to emerge in proximity to existing local demand for wind turbines. No evidence was found for producers being able to create local demand for their products by pushing the adoption of the technology in their regions.
    Keywords: supply-push, demand-pull, Bayesian survival analysis, wind energy
    JEL: Q21 R12 O33 O31
    Date: 2020–02
  11. By: Kolja Hesse; Dirk Fornahl
    Abstract: The role of radical innovations for the economy has received increasing attention by German policy makers. This paper investigates how (un-)related variety and external linkages influence these innovations in German labour market regions. Evidence is found that related and unrelated knowledge capabilities both support the emergence of radical innovations, although strong related capabilities are especially important. External linkages have an inverted u-shape relation to radically new ideas and can act as substitute for missing unrelated competences in a region. The results shed new light on the emergence of radical innovations and thus have interesting scientific and practical implications.
    Keywords: Radical innovations, related variety, unrelated variety, external linkages, labour market regions
    JEL: O31 O33 R11
    Date: 2020–02
  12. By: Nitsch, Volker; Ahlfeldt, Gabriel M.; Wendland, Nicolai
    Abstract: For a complete cost‐benefit analysis of durable infrastructures, it is important to understand how the value of non‐market goods such as transit time and environmental quality changes as incomes rise in the long‐run. We use difference‐in‐differences and spatial differencing to estimate the land price capitalization effects of metro rail in Berlin, Germany today and a century ago. Over this period, the negative implicit hedonic price of rail noise tripled. Our results imply income elasticities of the value of noise reduction and transport access of 2.2 and 1.4, substantially exceeding cross‐sectional contingent valuation estimates.
    Date: 2019–09
  13. By: Kerr,Andrew Nicholas; McDougall,Bruce
    Abstract: In this paper the impact of various agglomerative forces on employment growth in Ghanaian manufacturing is investigated, using data from two firm censuses, as well as population census and trade data. The study is the first to use nationally representative firm data that covers the formal and informal economy to investigate the impact of agglomerative forces on employment growth in an African economy. African economies are rapidly urbanizing, but this has not been accompanied by growth in manufacturing. A lack of agglomeration economies is one possible explanation for slow manufacturing growth and the attendant premature deindustrialization. The paper follows Combes (2000) in examining the importance of agglomeration economies on employment growth in Ghanaian manufacturing, finding that there is no evidence that population density is associated with faster employment growth. Other agglomeration economies do seem to play a role, although not always in the manner anticipated.
    Keywords: Common Carriers Industry,Food&Beverage Industry,Business Cycles and Stabilization Policies,General Manufacturing,Textiles, Apparel&Leather Industry,Pulp&Paper Industry,Construction Industry,Plastics&Rubber Industry,Employment and Unemployment,Labor Markets,Transport Services
    Date: 2019–07–22
  14. By: James Gaboardi
    Abstract: This paper furthers a research agenda for modeling populations along spatial networks and expands upon an empirical analysis to a full U.S. county (Gaboardi, 2019, Ch. 1,2). Specific foci are the necessity of, and methods for, validating and benchmarking spatial data when conducting social science research with aggregated and ambiguous population representations. In order to promote the validation of publicly-available data, access to highly-restricted census microdata was requested, and granted, in order to determine the levels of accuracy and error associated with a network-based population modeling framework. Primary findings reinforce the utility of a novel network allocation method—populated polygons to networks (pp2n) in terms of accuracy, computational complexity, and real runtime (Gaboardi, 2019, Ch. 2). Also, a pseudo-benchmark dataset’s performance against the true census microdata shows promise in modeling populations along networks.
    Keywords: network allocation, Master Address File, population representation
    Date: 2020–02

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