nep-geo New Economics Papers
on Economic Geography
Issue of 2020‒09‒28
nine papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Agglomeration Economies and Race Specific Spillovers By Elizabeth Ananat; Shihe Fu; Stephen L. Ross
  2. Entry of malls and exit of stores - The role of distance and economic geography By Klaesson, Johan; Nilsson, Helena
  3. IKEA entry - Effects on firms in retail and hospitality By Nilsson, Helena
  4. The Geography of New Technologies By Nicholas Bloom; Tarek A. Hassan; Aakash Kalyani; Josh Lerner; Ahmed Tahoun
  5. Collaborative knowledge creation: Evidence from Japanese patent data By Mori, Tomoya; Sakaguchi, Shosei
  6. Urbanization Effects on Job Search Decision By Yudai Higashi
  7. Optimal Lockdown in a Commuting Network By Pablo Fajgelbaum; Amit Khandelwal; Wookun Kim; Cristiano Mantovani; Edouard Schaal
  8. Interregional Demand for Workers and the Effects of Labor Income Taxation By Batabyal, Amitrajeet; Beladi, Hamid
  9. Understanding Persistence By Morgan Kelly

  1. By: Elizabeth Ananat (Duke University); Shihe Fu (Xiamen University); Stephen L. Ross (University of Connecticut)
    Abstract: Racial social isolation within workplaces may reduce firm productivity. We provide descriptive evidence that African-Americans feel socially isolated from whites. To test whether isolation affects productivity, we estimate models of Total Factor Productivity for manufacturing firms allowing the returns to concentrated economic activity and human capital to vary by the match between each establishment’s racial and ethnic composition and the composition of local area employment. Higher own-race representation increases the productivity return from employment density and concentrations of college educated workers. Looming demographic changes suggest that this drag on economic productivity may increase over time.
    Keywords: Agglomeration Economies; Firm Productivity; Human Capital Externalities; Information Networks; Racial and Ethnic Isolation
    JEL: J15 J24 L11 R12 R23 R32
    Date: 2020–09
  2. By: Klaesson, Johan (Center for Entrepreneurship and Spatial Economics); Nilsson, Helena (Institute of Retail Economics (Handelns Forskningsinstitut))
    Abstract: The empirical literature on the effects of external malls on incumbent stores is inconclusive, and quantitative research on this topic is limited. In an attempt to add to the literature, this study examines the effect of the entry of external retail malls on store survival. Using a full firm population panel dataset at the store level covering the period 2000-2014, we examine the effect of a change in the distance to an external retail mall on the probability of retail store exit. In doing this we explicitly model the economic geography. We measure the economic activity in the location where these stores are situated using a market potential measure to gauge the economic density. The main result of this study is that the effects differ depending on where the incumbent firm is located. The effects on firms located in low-density areas and those on firms located in high-density areas differ dramatically. In low-density areas we find complementary effects which means that the probability of incumbent store exit is lesser. In high-density areas the estimated effect is the opposite, the entry of a new external mall increases the probability of incumbent store exit. The strength of the effects is dependent on the distance between the incumbent firm and the newly established external mall. Additionally, the size of effects differs between different parts of the retail sector. Effects remain over a number of years after entry of external malls but become smaller over time.
    Keywords: external shopping malls; complements; retail; panel-data; firm-exit; market potential
    JEL: C33 D22 L81 P25
    Date: 2020–08–31
  3. By: Nilsson, Helena (Institute of Retail Economics (Handelns Forskningsinstitut))
    Abstract: This study examines the entry effects of a durable goods big box, IKEA, on incumbent firms in the retail, accommodation and restaurant sectors in Sweden. Using a difference-in-difference approach combined with matching, the effects of IKEA entry on the net turnover and employment of incumbent firms located at varying distances from the new IKEA store are examined. The results show that entry by IKEA increases the net turnover of retail firms near the entry site that sell complement goods, indicating that IKEA entry causes demand spillovers due to multipurpose shopping. IKEA entry also increases the net turnover of accommodation firms in the region, which indicates that the entrant has a positive effect on the attractivity of the area. The estimations reveal no effects on retail firms located in the affected city centers, which suggests that retail in central places may have a certain resilience to competition from out-of-town retail clusters. No robust effects on substitute goods retailers or restaurants are found.
    Keywords: IKEA; retail; hospitality; agglomeration economies; competition; difference-in-difference
    JEL: C33 D22 L81 L83
    Date: 2020–08–31
  4. By: Nicholas Bloom (Stanford University); Tarek A. Hassan (Boston University); Aakash Kalyani (Boston University); Josh Lerner (London Business School); Ahmed Tahoun (Harvard University)
    Abstract: We identify novel technologies using textual analysis of earnings conference calls, newspapers, announcements, and patents. Our approach enables us to document the rollout of 20 new technologies across firms and labor markets in the U.S. Four stylized facts emerge from our data. First, as technologies develop, the number of new positions related to them grows, but the average education requirements and wage levels of the positions drop. Second, as technologies develop, their employment impact diffuses across the country: initially, technologies are concentrated in local hubs, but over time, their adoption diffuses geographically. Third, despite this diffusion, the initial hubs retain a disproportionate share of employment in the technology, particularly at the high-skill end of the spectrum. Finally, technology hubs are more likely to arise in areas with universities and high skilled labor pools.
    Keywords: Technology, Geography, Employment, Innovation, R and D
    JEL: O31 O32
    Date: 2020–06–15
  5. By: Mori, Tomoya; Sakaguchi, Shosei
    Abstract: In this paper, we quantitatively characterize the mechanism of collaborative knowledge creation at the individual researcher level a la Berliant and Fujita(2008) by using Japanese patent data. The key driver for developing new ideas is found to be the exchange of differentiated knowledge among collaborators. To stay creative, inventors seek opportunities to shift their technological expertise to unexplored niches by utilizing the differentiated knowledge of new collaborators in addition to their own stock of knowledge. In particular, while collaborators' differentiated knowledge raises all the average cited count, average (technological) novelty and the quantity of patents for which an inventor contributes to the development, it has the largest impact on the average novelty among the three.
    Keywords: Knowledge creation, Collaboration, Differentiated knowledge, Technological novelty, Technological shift, Recombination, Patents, Network, Strategic interactions
    JEL: C33 C36 D83 D85 O31 R11
    Date: 2018–08–29
  6. By: Yudai Higashi (Graduate School of Humanities and Social Sciences, Okayama University and Junior Research Fellow, Research Institute for Economics and Business Administration, Kobe University, Japan)
    Abstract: This paper examines the effect of industrial agglomeration on a non-working individual's decision to search for a job. The theory implies that agglomeration reduces search costs, enabling non-working individuals to search for jobs. The empirical analyses, using Japanese microdata, find that agglomeration raises the probability of searching for a job, supporting the theoretical prediction. Furthermore, this effect is significant only for females who are less educated, middle-aged and older, and married without children. Such groups tend to benefit from agglomeration because they have relatively higher potential search costs than do other groups.
    Keywords: Agglomeration; Local labor market; Labor force participation; Heterogenous individual
    JEL: J64 R11 R23
    Date: 2020–09
  7. By: Pablo Fajgelbaum (Princeton University and NBER); Amit Khandelwal (Columbia GSB and NBER); Wookun Kim (Southern Methodist University); Cristiano Mantovani (Universitat Pompeu Fabra); Edouard Schaal (CREI, Universitat Pompeu Fabra, Barcelona GSE and CEPR)
    Abstract: We study optimal dynamic lockdowns against Covid-19 within a commuting network. Our framework integrates canonical spatial epidemiology and trade models, and is applied to cities with varying initial viral spread: Seoul, Daegu and NYC-Metro. Spatial lockdowns achieve substantially smaller income losses than uniform lockdowns, and are not easily approximated by simple centrality-based rules. In NYM and Daegu—with large initial shocks—the optimal lockdown restricts inflows to central districts before gradual relaxation, while in Seoul it imposes low temporal but large spatial variation. Actual commuting responses were too weak in central locations in Daegu and NYM, and too strong across Seoul.
    JEL: R38 R4 C6
    Date: 2020–06
  8. By: Batabyal, Amitrajeet; Beladi, Hamid
    Abstract: We study the short-run impacts of labor income taxation in an aggregate economy of N>2 regions. The distinct regions demand workers. Each region is endowed with one unit of immobile capital. The aggregate economy also has one unit of labor that is mobile across the regions. All regions produce a final good with identical Cobb-Douglas production functions. The price of output is normalized to unity. We perform five tasks. First, we focus on the benchmark case in which no region taxes either capital or labor. We find the equilibrium wage, the allocation of workers across the regions, and the total income of labor and capital. Second, we study the impact of a tax τ on labor income in region 1 when the other N-1 regions do not tax labor income. We ascertain the after-tax return to labor in region 1, the equilibrium wage, and the allocation of labor across the regions. Third, we compute the total income of capital and labor and the tax revenue in region 1. Fourth, we discuss whether workers in region 1 are better off with a tax on labor income. Finally, we comment on the policy implications of our research.
    Keywords: Capital, Labor, Interregional Demand, Labor Income Taxation, Factor Mobility
    JEL: H71 R12
    Date: 2020–04–07
  9. By: Morgan Kelly
    Abstract: A large literature on persistence finds that many modern outcomes strongly reflect characteristics of the same places in the distant past. These studies typically combine unusually high t statistics with severe spatial autocorrelation in residuals, suggesting that some findings may be artefacts of underestimating standard errors or of fitting spatial trends. For 25 studies in leading journals, I apply three basic robustness checks against spatial trends and find that effect sizes typically fall by over half, leaving most well known results insignificant at conventional levels. Turning to standard errors, there is currently no data-driven method for selecting an appropriate HAC spatial kernel. The paper proposes a simple procedure where a kernel with a highly flexible functional form is estimated by maximum likelihood. After correction, standard errors tend to rise substantially for cross sectional studies but to fall for panels. Overall, credible identification strategies tend to perform no better than naive regressions. Although the focus here is on historical persistence, the methods apply to regressions using spatial data more generally.
    Keywords: Deep origins; Robustness checks; Spatial noise; Explanatory variables; Standard errors
    Date: 2020–09

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