nep-geo New Economics Papers
on Economic Geography
Issue of 2020‒10‒26
ten papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. The Geography of Jobs and the Gender Wage Gap By Sitian Liu; Yichen Su
  2. Multinational enterprises, service outsourcing and regional structural change By Ascani, Andrea; Iammarino, Simona
  3. In knowledge we trust: learning-by-interacting and the productivity of inventors By Matteo Tubiana; Ernest Miguelez; Rosina Moreno
  4. The Geography of COVID-19 in Sweden By Florida, Richard; Mellander , Charlotta
  5. Within-between decomposition of the Gini index: a novel proposal By Federico Attili
  6. "Regional borders, local unemployment and happiness" By Antonio Di Paolo; Ada Ferrer-i-Carbonell
  7. Does investment in national highways help or hurt hinterland city growth? By Baum-Snow, Nathaniel; Henderson, J. Vernon; Turner, Matthew A.; Brandt, Loren
  8. Income Inequality and Product Variety: Empirical Evidence By Dieter Pennerstorfer; Nora Schindler; Christoph Weiss; Biliana Yontcheva
  9. Social Distancing and the Economic Impact of COVID-19 in the United States By Constantin Bürgi; Nisan Gorgulu
  10. Highways and Globalization By Taylor Jaworski; Carl Kitchens; Sergey Nigai

  1. By: Sitian Liu; Yichen Su
    Abstract: Prior studies have shown that women are more willing to trade off wages for short commutes than men. Given the gender difference in commuting preferences, we show that the wage return to commuting (i.e., the wage penalty for reducing commute time) that stems from the spatial distribution of jobs contributes to the gender wage gap. We propose a simple job choice model, which predicts that differential commuting preferences would lead to a larger gender wage gap for workers who face greater wage returns to commuting based on their locations of residence and occupations. We then show empirical evidence that validates the model's prediction. Moreover, we estimate the model components: (i) the indifference curves between wages and commutes by gender, and (ii) the wage return to commuting faced by each worker. Our model shows that differential commuting choices account for about 16-21% of the gender wage gap on average, but the contribution varies widely across residential locations. The model also shows that policies that increase commute speed or density in the central city neighborhoods could moderately lower the gender wage gap.
    Keywords: Gender wage gap; commuting; spatial distribution of jobs
    JEL: J16 J22 J31 R12 R41
    Date: 2020–10–02
  2. By: Ascani, Andrea; Iammarino, Simona
    Abstract: This article offers a joint analysis of two phenomena characterising most advanced economies in recent decades: the rise of foreign ownership in manufacturing activities and the pervasiveness of the service economy. The analysis focuses on a specific intersectoral demand-side channel for structural change: the forward linkage established by foreign manufacturing multinational enterprises (MNEs) with service providers through outsourcing in the UK local labour markets. Descriptive evidence shows that service outsourcing by foreign manufacturing plants is notably larger than that of their domestic counterparts. On this basic premise, we estimate the local multiplier effect that foreign manufacturing activity has on service employment. To test our hypotheses, the methodology adopts an instrumental variable approach. Our findings suggest that foreign MNEs in manufacturing can act as a catalyst for regional structural change by stimulating employment in intermediate services via demand linkages. While the composition of this effect seems to be homogeneous in terms of the knowledge content of services, differences are found once the degree of their spatial concentration is accounted for.
    Keywords: multinational enterprises; service outsourcing; regional structural change; local markets; multiplier; ES/M008436/1
    JEL: O3 R1
    Date: 2018–11–01
  3. By: Matteo Tubiana; Ernest Miguelez; Rosina Moreno
    Abstract: Innovation rarely happens through the actions of a single person. Innovators source their ideas while interacting with their peers, at different levels and with different intensities. In this paper, we exploit a dataset of disambiguated inventors in European cities to assess the influence of their interactions with co-workers, organizations’ colleagues, and geographically co-located peers, to understand if the different levels of interaction influence their productivity. Following inventors’ productivity over time and adding a large number of fixed effects to control for unobserved heterogeneity, we uncover critical facts, such as the importance of city knowledge stocks for inventors’ productivity, with firm knowledge stocks and network knowledge stocks being of smaller importance. However, when the complexity and quality of knowledge is accounted for, the picture changes upside down, and closer interactions (individuals’ coworkers and firms’ colleagues) become way more important.
    Keywords: inventors; productivity; stock of knowledge; interactions
    JEL: O18 O31 O33 O52 R12
    Date: 2020
  4. By: Florida, Richard (University of Toronto’s Rotman School of Management and School of Cities); Mellander , Charlotta (Jönköping International Business School & Centre of Excellence for Science and Innovation Studies (CESIS))
    Abstract: This paper examines the geographic factors that are associated with the spread of COVID-19 in Sweden. The country is a useful case study to examine because it did not impose mandatory lockdowns, and thus we would expect the virus to spread in a more unimpeded way across communities. A growing body of research has examined the role of factors like density, household size, air connectivity, income, race and ethnicity, age, political affiliation, temperature and climate, and policy measure like lockdowns and physical distancing among others. The research examines the effects of some of these factors on the geographic variation of COVID-19 cases and on deaths, across both municipalities and neighborhoods. Our findings show that the geographic variation in COVID-19 is significantly but modestly associated with variables like density, population size, and the socio-economic characteristics of places, and somewhat more associated with variables for household size. What matters more is the presence of high-risk nursing homes and the onset of infections with places that were hit earlier by COVID-19 cases experiencing more severe outbreaks. Still, all these variables explain little of the geographic variation in COVID-19 across Sweden. There appears to be a high degree of randomness in the geographic variation of COVID-19 across Sweden and the degree to which some places were hit harder than others.
    Keywords: COVID-19; Sweden; geography; density; connectivity
    JEL: I10 J19 R23
    Date: 2020–10–13
  5. By: Federico Attili
    Abstract: The socioeconomic impact of spatial concentration has been receiving an increasing attention during the last two decades. Consequently, the necessity of effective measures of this phenomenon has increased too. This paper considers a population partitioned by subgroups and develops a decomposition of the Gini index in two components, which measure the within and the between group inequality and are also particularly effective to quantify spatial concentration. Indeed, they possess a crucial property which overcomes important issues that may arise using any Gini index decomposition in the spatial context, following a recent approach. In addition, the availability of an only-two highly informative components decomposition provides in numerous applications and several frameworks further significant advantages in the determination of the contributions to global inequality of the intra and the inter groups differences. The ability of the components to capture these phenomena is supported by a parametric bootstrap procedure. This highlights extremely high correlations between the components and two axiomatically derived benchmarks. The presentation of a case study concerning the income distribution in the Italian provinces concludes the works, the informativeness and the interpretative advantages of the proposed decomposition appear evidently.
    JEL: D31 D63 O15 R10 R12
    Date: 2020–10
  6. By: Antonio Di Paolo (AQR-IREA Research Group, University of Barcelona. Department of Econometrics, Statistics and Applied Economics. Av. Diagonal 690, 08034 Barcelona, Spain.); Ada Ferrer-i-Carbonell (Institute of Economic Analysis (IAE-CSIC), Barcelona GSE, IZA, and MOVE.)
    Abstract: In this paper we provide novel evidence on the effect of local unemployment rate on life satisfaction. We investigate how changes in unemployment rate in local administrative areas affect subjective well-being in Germany, allowing for the presence of spatial spillovers and considering the role played by regional borders. The results indicate that higher unemployment in the own local area of residence has a negative effect on satisfaction. Similarly, individuals’ happiness negatively correlates with the unemployment rate in contiguous local areas, but only if these areas are located in the same Federal State as the one where the individual lives. These results are robust to a variety of specifications, definitions, sample restrictions and estimation methods. Heterogeneity analysis reveals that these negative effects of local unemployment rate are larger for individuals with stronger ties to the job market and less secure jobs. This points to worries about own job situation as the main driver of individuals’ dislike for living in areas with high unemployment rate and tight labour markets. Consistently with this, the same asymmetric effect of local unemployment rate of surrounding areas is replicated when life satisfaction is replaced with a proxy for perceived job security as outcome variable.
    Keywords: Life satisfaction, Local unemployment, Spatial spillovers, Neighbouring areas, Regional borders JEL classification: I31, J64, J28, R23
    Date: 2020–10
  7. By: Baum-Snow, Nathaniel; Henderson, J. Vernon; Turner, Matthew A.; Brandt, Loren
    Abstract: We investigate the effects of the recently constructed Chinese national highway system on local economic outcomes. On average, roads that improve access to local markets have small or negative effects on prefecture economic activity and population. However, these averages mask a distinct pattern of winners and losers. With better regional highways, economic output and population increase in regional primates at the expense of hinterland prefectures. Highways also affect patterns of specialization. With better regional highways, regional primates specialize more in manufacturing and services, while peripheral areas lose manufacturing but gain in agriculture. Better access to international ports promotes greater population, GDP, and private sector wages on average, effects that are probably larger in hinterland than primate prefectures. An important policy implication is that investing in local transport infrastructure to promote growth of hinterland prefectures has the opposite effect, causing them to specialize more in agriculture and lose economic activity.
    Keywords: transportation; urban growth; economic geography
    JEL: J1 Q15
    Date: 2020–01–01
  8. By: Dieter Pennerstorfer; Nora Schindler (WU Wien); Christoph Weiss; Biliana Yontcheva (WU Wien)
    Abstract: This article investigates the relationship between income inequality and firms’ locations and product choices. Using detailed information on income at a regionally disaggregated level and individual data on Austrian restaurants, we demonstrate that firm conduct crucially depends on the distribution (in addition to the level) of income. Local markets with higher income inequality are characterized by a larger number of firms, offering a broader range of products and product variants that are on average less common. These findings indicate that local demand is substantially influenced by the heterogeneity in consumers’ income endowments, resulting in large differences in product variety.
    Keywords: income inequality, product variety, product differentiation, firm conduct, restaurants
    JEL: L22 D31 R12 L83
    Date: 2020–09
  9. By: Constantin Bürgi; Nisan Gorgulu
    Abstract: This study documents how the demographics of new infections and mortality changed over time across US counties. We find that counties with a larger population share aged above 60 were hit harder initially in terms of both cases and mortality in March and April while counties with a larger population share aged below 20 were hit harder in June and July. At the same time, how counties that voted Democratic in 2016 are affected does not change over time. Subsequently, we simulate an alternative evolution of the pandemic, assuming that states extended the lockdown measures until daily new cases reach the levels of European countries after their lockdown measures were relaxed. In the baseline simulation, we find that cases and deaths would have increased by around 50% less by the end of June, but it would have led to a 2 percentage point larger drop in Q2 GDP.
    Keywords: spatial population distribution, pandemic, Covid-19, lockdown, stay-at-home order, economic impact, non-pharmaceutical interventions
    JEL: C53 H12 I18 R11
    Date: 2020
  10. By: Taylor Jaworski; Carl Kitchens; Sergey Nigai
    Abstract: This paper quantifies the value of US highways and their contribution in shaping regional specialization patterns and facilitating internal and external market integration. We develop a multisector general equilibrium model of interregional and international trade with many locations in the United States (i.e., counties) and many countries. In the model, producers choose shipping routes subject to domestic and international trade costs, endogenous congestion, and port efficiency at international transshipment points. We find that removing the Interstate Highway System reduces real GDP by $619.1 billion (or 3.9 percent) with one quarter due to reduced international market access. We also quantify the value of the twenty longest highway segments and find a range between $2.7 and $55.1 billion with I-5 being the most valuable. Our results highlight the role of domestic transportation infrastructure in shaping regional comparative advantage and gains from international trade.
    JEL: F11 F14 H54 R13 R42
    Date: 2020–10

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