nep-geo New Economics Papers
on Economic Geography
Issue of 2020‒07‒13
eleven papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Path dependence in regional structural change: implications for the EU cohesion and innovation policy By Tullio Buccellato; Giancarlo Corò
  2. Spatial Economics for Granular Settings By Jonathan I. Dingel; Felix Tintelnot
  3. Geographic Clustering and Resource Reallocation Across Firms in Chinese Industries By Guo, Di; Jiang, Kun; Xu, Chenggang; Yang, Xiyi
  4. Occupational Matching and Cities By Theodore Papageorgiou
  5. Local public goods and the geography of economic activity By Arthur Guillouzouic--Le Corff
  6. Universities, agglomeration, and regional innovation By Orlando, Michael; Verba, Michael; Weiler, Stefan
  7. Transportation Infrastructure in the US By Matthew Turner; Gilles Duranton; Geetika Nagpal
  8. Economic geography, politics, and policy By Rickard, Stephanie J.
  9. Spatial Economic Aspects of Climate Change By Batabyal, Amitrajeet; Folmer, Henk
  10. Understanding Spatial Variation in COVID-19 across the United States By Klaus Desmet; Romain Wacziarg
  11. Inflation and Labor Migration: Modelling the Venezuelan Case By Ademir Rocha; Cleomar Gomes da Silva, Fernando Perobelli

  1. By: Tullio Buccellato (Economic Research Department, Confindustria); Giancarlo Corò (Department of Economics, University Of Venice Cà Foscari)
    Abstract: The key purpose of this paper is to measure the strength of regional economic fabrics based on their structure. We propose a new mapping of European regions based on structural proximity; the representation takes the shape of a network, which is also useful to define clusters of regions according to the similarity of their economic structures and, hence, in the endowment of productive competences. We show that there is a high persistence in the relative positioning of regions according to their economic structure and that this is markedly associated with patterns of economic growth and convergence. The spectrum of regional performance range from virtuous urban agglomerates characterized by the presence of advanced services, with enhanced institutional quality, endowed with efficient transport infrastructures and highly educated and productive workforce, to regions characterised by scarce service or industrial activity, sometimes with a cumbersome role of tourism-related business, with poor institutions and transport infrastructure and low endowments of human capital and productive workforce. To richer pools of productive competences are associated faster paces of economic growth. The findings of this paper suggest that place-based policies should be implemented to support territorial development in the short/medium term, but these policies can be effective for the long run growth only when they are meant to leverage on the regional pool of competences to trace trajectories of structural change.
    Keywords: Resilience, economic complexity, regional disparities
    JEL: O10 O25 P25 R10 L16
    Date: 2020
  2. By: Jonathan I. Dingel; Felix Tintelnot
    Abstract: We introduce a general-equilibrium model of a “granular” spatial economy populated by a finite number of people. Our quantitative model is designed for application to the growing body of fine spatial data used to study economic outcomes for regions, cities, and neighborhoods. Conventional approaches invoking the law of large numbers are ill-suited for such empirical settings. We evaluate quantitative spatial models’ out-of-sample predictions using event studies of large office openings in New York City. Our granular framework improves upon the conventional continuum-of-individuals model, which perfectly fits the pre-event data but produces predictions uncorrelated with the observed changes in commuting flows.
    JEL: C25 F16 R1 R13 R23
    Date: 2020–05
  3. By: Guo, Di; Jiang, Kun; Xu, Chenggang; Yang, Xiyi
    Abstract: We examine the effects of China's industrial clustering on resource reallocation efficiency across firms. Based on our county-industry level DBI index panel, we find that industrial clustering significantly increases local industries' productivity by lifting the average firm productivity and reallocating resources from less to more productive firms. Moreover, we find major mechanisms through which resource reallocation is improved within clusters: (i) clusters facilitate higher entry rates and exit rates; and (ii) within clusters' environment the dispersion of individual firm's markup is significantly reduced, indicating intensified local competition within clusters. The identification issues are carefully addressed by instrumental variable (IV) regressions.
    Keywords: Competition; Industrial Cluster; Productivity Growth; Resource reallocation
    JEL: D2 H7 L1 O1 R1 R3
    Date: 2020–03
  4. By: Theodore Papageorgiou (Boston College)
    Abstract: In this paper, I document that workers in larger cities have significantly more occupational options than workers in smaller ones. They are able to form better occupational matches and earn higher wages. I also note differences in the occupational reallocation patterns across cities. I develop a dynamic model of occupational choice that microfounds agglomeration economies and captures the empirical patterns. The calibration of the model suggests that better occupational match quality accounts for approximately 35% of the observed wage premium and a third of the greater inequality in larger cities.
    Keywords: Occupations, Agglomeration Economies, Urban Wage Premium, Multi-armed Bandits, Geographical Mobility, Matching Theory, Wage Inequality, Job Vacancy Postings
    JEL: J24 J31 R23
    Date: 2020–06–14
  5. By: Arthur Guillouzouic--Le Corff (Département d'économie)
    Abstract: Cette thèse étudie la manière dont l’hétérogénéité dans la production de biens publics locaux peut influencer la géographie de l’activité économique, en s’appuyant sur l’étude de deux mécanismes générant une telle hétérogénéité. Dans les deux premiers chapitres, le bien public local étudié est la connaissance technologique. Cette approche trouve sa source dans une vaste littérature montrant que les flux de connaissance sont sujets à un important biais spatial. Le premier chapitre étudie les dynamiques de formation des liens entre innovateurs, et leurs conséquences sur l’effet agrégé de la distance sur les flux de connaissance. L’analyse montre que les innovateurs trouvent des nouvelles sources de connaissance graduellement, via les contacts de leurs propres contacts. En introduisant cet élément dans un modèle de formation de réseau, on obtient des prédictions sur la taille des innovateurs et sur la relation entre taille et distance des citations qui sont vérifiées dans les données. Le second chapitre prend ces réseaux locaux d’innovateurs comme fixés, et examine leur influence sur les décisions de relocalisations d’établissements de R&D par les firmes. Je montre que les firmes innovantes sont plus mobiles que la moyenne, et que des réseaux d’innovation plus denses attirent les firmes tandis qu’une mauvaise position dans le réseau rend les firmes plus susceptibles de se relocaliser. J’étudie ensuite théoriquement le problème d’une firme pouvant relocaliser ses laboratoires mais possédant des informations limitées sur les autres localisations. Le troisième chapitre s’intéresse à un problème différent dans lequel le bien public local est produit par le service public de manière spatialement hétérogène, à cause de salaires fixés de manière centralisée. Il montre que les fonctionnaires génèrent des externalités positives sur le secteur privé, ce qui implique que des niveaux hétérogènes de biens publics locaux déforment la géographie de l’activité privée.
    Keywords: Local public goods, Innovation networks, Urban economics, Knowledge diffusion; Biens publics locaux, Réseaux d’innovateurs, Economie urbaine, Diffusion de connaissance
    Date: 2019–07
  6. By: Orlando, Michael; Verba, Michael (Tilburg University, School of Economics and Management); Weiler, Stefan
    Date: 2019
  7. By: Matthew Turner; Gilles Duranton; Geetika Nagpal
    Abstract: Support for massive investments in transportation infrastructure, possibly with a change in the share of spending on transit, seems widespread. Such proposals are often motivated by the belief that our infrastructure is crumbling, that infrastructure causes economic growth, that current funding regimes disadvantage rural drivers at the expense of urban public transit, or that capacity expansions will reduce congestion. In fact, most US transportation infrastructure is not deteriorating and the existing scientific literature and does not show that infrastructure creates growth or reduces congestion. However, current annual expenditure on public transit buses exceeds that on interstate construction and maintenance. The evidence suggests the importance of an examination of how funding is allocated across modes but not of massive new expenditures.
    JEL: R1 R4
    Date: 2020–05
  8. By: Rickard, Stephanie J.
    Abstract: Globalization has reduced the importance of distance between countries. Yet, within countries, geography matters now more than ever. Economic activities, including production and employment, occur unevenly across space within countries, and globalization consequently impacts various regions differently. Some areas benefit from international economic integration while others lose, and as a result, economic geography shapes citizens¤rsquo¤ experience of globalization. Economic geography also influences governments¤rsquo¤ responses to globalization and economic shocks. Economic geography consequently merits the attention of political scientists. By examining economic geography, researchers will find new traction on long-standing theoretical debates and valuable insights on recent developments, including the growing backlash against globalization. The challenges of studying economic geography include causal complexity and measurement issues.
    Keywords: economic geography; electoral institutions; geography of discontent; globalization; left-behind places; populism
    JEL: L81
    Date: 2020–05–11
  9. By: Batabyal, Amitrajeet; Folmer, Henk
    Abstract: Our objective in this special issue is twofold. First, we emphasize the importance of comprehending that the global impacts of climate change notwithstanding, there are salient region-specific impacts that vary across space. Second, given this observation, we show how rigorous modeling of the connections between climate change and (i) land use changes, (ii) forestry, (iii) infrastructure, and (iv) local labor markets sheds light on a variety of climate change induced spatial economic effects. Following this introductory paper, there are seven additional papers in this special issue. Each of these papers discusses a particular research question at the interface of what we call “climate change and space.”
    Keywords: Forestry, Infrastructure, Land Use, Local Labor Market, Space
    JEL: Q54 R11
    Date: 2020–03–11
  10. By: Klaus Desmet; Romain Wacziarg
    Abstract: We analyze the correlates of COVID-19 cases and deaths across US counties. We consider a wide range of correlates - population density, public transportation, age structure, nursing home residents, connectedness to source countries, among others - in an effort to pinpoint factors explaining differential severity of the disease at the county level. The patterns we identify are meant to improve our understanding of the drivers of the spread of COVID-19, with an eye toward helping policymakers design responses that are sensitive to the specificities of different locations.
    JEL: I18 R1
    Date: 2020–06
  11. By: Ademir Rocha; Cleomar Gomes da Silva, Fernando Perobelli
    Abstract: The Venezuelan hyperinflation process has caused serious economic and social consequences. The wave of migrants and refugees fleeing the country is one of the most obvious and important faces of the problem. The objective of this paper is to develop a model that can explain labor migration flow from changes in price level and apply it to the Venezuelan reality. We make use of a theoreticalmethodological framework related to the New Economic Geography. Results from our model's simulations show that, in the short run (1-year simulation horizon), Venezuelan industrial and agricultural workers will tend to migrate to nearby countries, such as Colombia, Brazil, Ecuador and Peru. However, in the long run (10-year simulation horizon), agents seem to decide based on real wage differential. This explains why industrial workers have a propensity to migrate to Chile, Panama, Peru and Mexico, while agricultural workers have an incentive to move to Argentina, Chile, Mexico and Brazil.
    Keywords: Inflation; Migration; Venezuela; New Economic Geography
    JEL: J61 E31 R10
    Date: 2020–06–18

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