nep-geo New Economics Papers
on Economic Geography
Issue of 2020‒04‒13
fourteen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Proximity, Innovation and Networks: A Concise Review and Some Next Steps By Pierre-Alexandre Balland; Ron Boschma; Koen Frenken
  2. Calling from the outside: The role of networks in residential mobility By Konstantin Büchel; Maximilian V. Ehrlich; Diego Puga; Elisabet Viladecans-Marsal
  3. Spatial externality and indeterminacy By Emmanuelle Augeraud-Véron; Arnaud Ducrot
  4. What Do We Learn From Cross-Regional Empirical Estimates in Macroeconomics? By Adam Guren; Alisdair McKay; Emi Nakamura; Jón Steinsson
  5. Migration-prone and migration-averse places. Path dependence in long-term migration to the US By Andrés Rodríguez-Pose; Viola von Berlepsch
  6. Hipsters vs. Geeks? Creative workers, STEM and innovation in US cities By Andrés Rodríguez-Pose; Neil Lee
  7. Institutions and the fortunes of territories By Andrés Rodríguez-Pose
  8. A revised application of 3Ts´ Florida in peri-urban areas By Cattivelli, Valentina; Stawinoga, Agnieszka
  9. Trade Shocks and Growth: The Impact of the Quartz Crisis in Switzerland By Twinam, Tate
  10. Key Players in Economic Development By Amarasinghe, Ashani; Hodler, Roland; Raschky, Paul A.; Zenou, Yves
  11. Workplace Choice, Commuting Costs, and Wage Taxation in Urban and Adjacent Rural Regions By Batabyal, Amitrajeet; Nijkamp, Peter
  12. Transportation Improvement and Hollowing-out of Urban Commercial Center: Do They Harm Consumer Welfare? By Kishi, Akio; Kono, Tatsuhito
  13. Regional Convergence in Russia: Estimating a Neoclassical Growth Model By Lehmann, Hartmut; Oshchepkov, Aleksey; Silvagni, Maria Giulia
  14. Disparities in Regional Productivity, Capital Accumulation, and Efficiency across Indonesia: A Convergence Clubs Approach By Mendez-Guerra, Carlos; Kataoka, Mitsuhiko

  1. By: Pierre-Alexandre Balland; Ron Boschma; Koen Frenken
    Abstract: We review proximity research on collaborative innovation among organizations. We discuss the basic theorical tenets of collaborative innivation and summarize empirical findings on the roles of various forms of proximity. At the aggregative level, we look at studies of inter-organizational relations at the aggregate level of innovation systems. We end with a discussion of next steps in proximity research on collaborative innovation.
    Keywords: proximity, innovation, networks, inter-organizational relations, innovation systems, knowledge base
    JEL: B25 D85 L14 O3 R1
    Date: 2020–03
  2. By: Konstantin Büchel (University of Bern); Maximilian V. Ehrlich (University of Bern); Diego Puga (CEMFI, Centro de Estudios Monetarios y Financieros); Elisabet Viladecans-Marsal (Universitat de Barcelona)
    Abstract: Using anonymised cellphone data, we study the role of social networks in residential mobility decisions. Individuals with few local contacts are more likely to change residence. Movers strongly prefer places with more of their contacts closeby. Contacts matter because proximity to them is itself valuable and increases the enjoyment of attractive locations. They also provide hard-to-find local information and reduce frictions, especially in home-search. Local contacts who left recently or are more central are particularly influential. As people age, proximity to family gains importance relative to friends.
    Keywords: Social networks, residential mobility.
    JEL: R23 L14
    Date: 2019–03
  3. By: Emmanuelle Augeraud-Véron (MIA - Mathématiques, Image et Applications - ULR - Université de La Rochelle); Arnaud Ducrot (LMAH - Laboratoire de Mathématiques Appliquées du Havre - ULH - Université Le Havre Normandie - NU - Normandie Université)
    Abstract: We study conditions for existence and uniqueness of solutions in some space-structured economic models with long-distance interactions between locations. The solution of these models satisfies non local equations, in which the interactions are modeled by convolution terms. Using properties of the spectrum location obtained by studying the characteristic equation, we derive conditions for the existence and uniqueness of the solution. This enables us to characterize the degree of indeterminacy of the system being considered. We apply our methodology to a theoretical one-sector growth model with increasing returns, which takes into account technological interdependencies among countries that are modeled by spatial externalities. When symmetric interaction kernels are considered, we prove that conditions for which indeterminacy occurs are the same as the ones needed when no interactions are taken into account. For Gaussian kernels, we study the impact of the standard deviation parameter on the degree of indeterminacy. We prove that when some asymmetric kernels are considered, indeterminacy can occur with classical assumptions on supply and demand curves. © The authors. Published by EDP Sciences, 2019.
    Keywords: Characteristic equation,Convolution,Economics,Existence and uniqueness,Existence and uniqueness of solution,Indeterminacy,Long distance interactions,Non-local equations,Spatial externalities,Standard deviation
    Date: 2019
  4. By: Adam Guren; Alisdair McKay; Emi Nakamura; Jón Steinsson
    Abstract: Recent empirical work uses variation across cities or regions to identify the effects of economic shocks of interest to macroeconomists. The interpretation of such estimates is complicated by the fact that they reflect both partial equilibrium and local general equilibrium effects of the shocks. We propose an approach for recovering estimates of partial equilibrium effects from these cross-regional empirical estimates. The basic idea is to divide the cross-regional estimate by an estimate of the local fiscal multiplier, which measures the strength of local general equilibrium amplification. We apply this approach to recent estimates of housing wealth effects based on city-level variation, and derive conditions under which the adjustment is exact. We then evaluate its accuracy in a richer general equilibrium model of consumption and housing. The paper also reconciles the positive cross-sectional correlation between house price growth and construction with the notion that cities with larger price volatility have lower housing supply elasticities using a model in which housing supply elasticities are more dispersed in the long run than in the short run.
    JEL: E20 R21
    Date: 2020–03
  5. By: Andrés Rodríguez-Pose; Viola von Berlepsch
    Abstract: Does past migration beget future migration? Do migrants from different backgrounds, origins and ethnicities, and separated by several generations always settle – in a path dependent way – in the same places? Is there a permanent separation between migration-prone and migration-averse areas? This paper examines whether that is the case by looking at the settlement patterns of two very different migration waves to the United States (US), that of Europeans at the end of the 19th and early 20th centuries and that of Latin Americans between the 1960s and the early 21st century. Using Census data aggregated at county level, we track the settlement pattern of migrants and assess the extent to which the first mass migration wave has determined the later settlement pattern of Latin American migrants. The analysis, conducted using ordinary least squares, instrumental variable and panel data estimation techniques, shows that past US migration patterns create a path dependence that has conditioned the geography of future migration waves. Recent Latin American migrants have flocked, once other factors are controlled for, to the same migration prone US counties where their European predecessors settled, in spite of the very different nature of both migration waves and a time gap of three to five generations.
    Keywords: migration, migration waves, long-term, Latin America, Europe, counties, US
    JEL: F22 J15 O15 R23
    Date: 2020–04
  6. By: Andrés Rodríguez-Pose; Neil Lee
    Abstract: Innovation in cities is increasingly regarded as an outcome of two potential inputs: scientific activity and creativity. Recent research using firm level data has suggested that actually it might be the combination of these two inputs, rather than the mere presence of workers representing each group, which matters. Yet there is little evidence on whether this relationship holds using city level data in the case of the United States (US). This paper investigates this gap in our knowledge by examining how the combination of STEM (geeks) and creative workers (hipsters) in a panel of 290 US Metropolitan Statistical Areas during the period between 2005 and 2015 relates to city level innovation. The results indicate that, although the presence of STEM workers is a more important driver of innovation than that of creative ones, the most innovative cities are characterised by a combination of the two. Hence, current policies which tend to focus mainly on either STEM or creativity may be better targeted at ensuring interactions between the two.
    Keywords: creativity, creative class, STEM, innovation, cities, United States
    JEL: O18 O32 O33 R12
    Date: 2020–04
  7. By: Andrés Rodríguez-Pose
    Abstract: Regions and cities face unceasing pressures to adapt in response to processes of globalisation, changes in industrial production, and new patterns of migration and trade. At the same time, the dominant development policies are proving less than capable of providing answers to these challenges. Strategies based on a mix of physical and human capital and technology have not succeeded in dealing with growing territorial inequality and its treacherous economic, social and political consequences. There is thus an urgent need to understand why territorial divergence occurs and why there is what seems to be a growing decline in the returns of public intervention targeting economic development. In search for answers, scholars have turned to the examination of institutions. But despite progress in our grasp of how institutions affect development, crucial knowledge gaps remain. This paper reviews recent progress in our understanding of the role of institutions for development, unveils the most important gaps, and proposes a series of avenues to improve how a better understanding of how institutions shape regional and urban development can lead to more efficient development policies.
    Keywords: institutions, government quality, public policies, regions, cities
    JEL: E02 O43 R11 R50
    Date: 2020–03
  8. By: Cattivelli, Valentina; Stawinoga, Agnieszka
    Abstract: This article analyzes the determinants and the distribution of Creative Class in peri-urban areas. Starting from Florida´s hypothesis on localization patterns (the famous 3Ts), the article uses unique measures to define tolerance and urban climate, to add innovative determinants and extend the analysis to peri-urban territory in Northern Italy. These measures are tested applying a principal component analysis and spatial regression models. The results partially confirm Florida. Creative class presence is strongly associated with socio-economic determinants, such us public expenditure, presence of creative and no-creative firms, volunteering; less than cultural amenities and technology. Tolerance has more controversial effects.
    Keywords: Creative class, creative capital, Peri-urban municipalities, civil unions
    JEL: R00 R1 R11 R12
    Date: 2019–10
  9. By: Twinam, Tate
    Abstract: Agglomeration economies and clustering effects are a key driver of urban growth. They can also be a source of vulnerability when cities and regions specialize in export-intensive industries. Foreign competition, exchange rate movements, macroeconomic volatility, and technological change are all potential threats to exporters, and shocks to these industries can have long-run impacts on population size and growth. In this paper, I study an unusual confluence of all four of these trade shocks: The quartz crisis in Switzerland, which devastated the globally-dominant Swiss watch industry in the 1970s. I document the geographic agglomeration pattern of the industry and the impact of the crisis on exports, employment, and wages. Using a differences-in-differences strategy, I show that this series of trade shocks led to a large and rapid loss of population in affected areas, and a long-run change in growth patterns. I explore the mechanisms behind this population change, including the role of manufacturing employment and immigration. I discuss the implications of these results for theories of urban growth, and contrast them with recent work on the China shock in Europe and the United States.
    Date: 2020–03–12
  10. By: Amarasinghe, Ashani (Monash University); Hodler, Roland (University of St. Gallen); Raschky, Paul A. (Monash University); Zenou, Yves (Monash University)
    Abstract: This paper analyzes the role of networks in the spatial diffusion of local economic shocks in Africa. We show that road and ethnic connectivity are particularly important factors for diffusing economic spillovers over longer distances. We then determine the key players, i.e., which districts are key in propagating local economic shocks across Africa. Using these results, we conduct counterfactual policy exercises to evaluate the potential gains from policies that increase economic activity in specific districts or improve road connectivity between districts.
    Keywords: transportation, natural resources, key player centrality, spatial spillovers, networks, Africa
    JEL: O13 O55 R12
    Date: 2020–03
  11. By: Batabyal, Amitrajeet; Nijkamp, Peter
    Abstract: We analyze the impact of wage taxation on the workplace choices of and the commuting costs borne by individuals in an aggregate economy consisting of an urban and an adjacent rural region. This economy is inhabited by a continuum of individuals who are uniformly distributed with a total mass of one. These individuals choose whether to work in the urban or in the rural region. The wage is higher (lower) in the urban (rural) region. Our analysis leads to three findings. First, assuming that individuals work in the region in which their after-tax wage net of commuting costs is the highest, we compute the equilibrium number of workers in each region. Second, supposing that the rural region’s median voter works in the urban region, we determine the Nash equilibrium in taxes and ask whether either of the two regions ought to tax or to subsidize the wage. Finally, assuming that the rural region’s median voter works in the rural region, we solve for the Nash equilibrium in taxes and show that optimality calls for the urban and the rural governments to subsidize the two wages.
    Keywords: Commuting Cost, Rural Region, Urban Region, Wage Taxation, Workplace Choice
    JEL: H30 R12 R49
    Date: 2019–08–26
  12. By: Kishi, Akio; Kono, Tatsuhito
    Abstract: Concentration or dispersion of retail stores is the result of market interactions. If it involves market failures, then the spatial location equilibrium of retail stores is not optimal in terms of social welfare. We investigate two important market failures involving retail store location: “monopolistic competition among retail stores” and “shopping externality caused by multipurpose shopping”. Retail store locations in market equilibrium and those in a social optimum are derived. Next, we show that the degree of hollowing-out of urban centers is not always excessive from the perspective of the social optimum. It is believed that hollowing-out of urban commercial centers harms social welfare. But on the contrary, if the accessibility of suburban areas from residential areas is lower than that of the urban center, we confirm that hollowing-out of urban commercial centers is desirable. In this case, promotion of retail stores’ location in urban center, such as subsidies to locate in the city center or restrictions on location in suburbs, decreases social welfare. Instead, promotion of stores’ location in the suburbs is preferred.
    Keywords: monopolistic competition, hollowing-out, suburbanization, shopping externality
    JEL: L11 L13 R12 R32
    Date: 2020–03–24
  13. By: Lehmann, Hartmut (University of Bologna); Oshchepkov, Aleksey (NRU HSE, Moscow); Silvagni, Maria Giulia (University of Bologna)
    Abstract: In this paper, we study convergence in per capita gross regional products across Russian regions in the period from 1996 to 2017. To this purpose, we estimate growth equations, which are directly derived from a neoclassical growth model, augmented with human capital and migration. To our knowledge, this is the first paper that explicitly applies a neoclassical model to analyze the regional convergence process in the Russian case. We also take into account possible spatial effects and do a series of other robustness checks. Our main estimates establish a convergence rate of around 2% per year. While we fail to find any role of human capital for regional economic growth, we find that interregional migration and interdependencies of the growth experience of Russian regions contribute to economic convergence between them.
    Keywords: migration, regional economics, economic growth, convergence, Russia
    JEL: O47 R11 P2
    Date: 2020–03
  14. By: Mendez-Guerra, Carlos; Kataoka, Mitsuhiko
    Abstract: This paper studies the evolution of regional disparities in labor productivity, capital accumulation, and efficiency across Indonesian provinces over the 1990-2010 period. Through the lens of a non-linear dynamic factor model, we first test the hypothesis that all provinces would eventually converge to a common steady-state path. We reject this hypothesis and find that the provincial dynamics of labor productivity are characterized by two convergence clubs. We next evaluate the dynamics of the proximate determinants of labor productivity and find some mixed results. On the one hand, physical and human capital accumulation are characterized by four and two convergence clubs, respectively. On the other hand, efficiency is characterized by a unique convergence club. The paper concludes suggesting that based on the provincial composition of each club and the common low level of efficiency across Indonesia, considerable improvements in both capital accumulation and efficiency are still needed to reduce regional disparities and accelerate productivity growth.
    Keywords: Regional productivity, Capital Accumulation, Efficiency, Convergence clubs, Indonesia
    JEL: R10 R11 R58
    Date: 2020–03–28

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