nep-geo New Economics Papers
on Economic Geography
Issue of 2020‒11‒23
eleven papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Persistence and Path Dependence in the Spatial Economy By Treb Allen; Dave Donaldson
  2. What drives the location choice of new manufacturing plants in Germany? By Krenz, Astrid
  3. The Comparative Advantage of Dutch Cities By Steven Brakman; Tijl Hendrich; Charles van Marrewijk; Jennifer Olsen
  4. A Vicious Cycle of Regional Unemployment and Crime? - Evidence from German Counties By Umbach, Tim
  5. Introduction to "Rural-Urban Dichotomies and Spatial Development in Asia" By Batabyal, Amitrajeet; Higano, Yoshiro; Nijkamp, Peter
  6. Quality-adjusted Population Density By J. Vernon Henderson; Adam Storeygard; David N. Weil
  7. Environmental expenditure interactions among OECD countries, 1995-2017 By Julie Le Gallo; Youba Ndiaye
  8. The Fetters of Inheritance? Equal Partition and Regional Economic Development By Huning, Thilo R.; Wahl, Fabian
  9. Causal Inference for Spatial Treatments By Michael Pollmann
  10. A Generalizable and Accessible Approach to Machine Learning with Global Satellite Imagery By Esther Rolf; Jonathan Proctor; Tamma Carleton; Ian Bolliger; Vaishaal Shankar; Miyabi Ishihara; Benjamin Recht; Solomon Hsiang
  11. The Alps 2050 Atlas ALPS 2050 By Tobias Chilla; Anna Heugel; Thomas Streifeneder; Elisa Ravazzoli; Peter Laner; Ulrike Tappeiner; Francesca Teston; Lukas Egarter; Thomas Dax; Ingrid Machold; Marco Pütz; Naja Marot; Jean-François Ruault

  1. By: Treb Allen; Dave Donaldson
    Abstract: How much of the spatial distribution of economic activity today is determined by history rather than by geographic fundamentals? And if history matters for the distribution, does it also affect overall efficiency? This paper develops a tractable theoretical and empirical framework that aims to provide answers to these questions. We derive conditions on the strength of agglomeration externalities, valid for any geography, under which temporary historical shocks can have extremely persistent effects and even permanent consequences (path dependence). We also obtain new analytical expressions, functions of the particular geography in question, that bound the aggregate welfare level that can be sustained in any steady-state, thereby bounding the potential impact of history. Our simulations—based on parameters estimated from spatial variation across U.S. counties from 1800-2000—imply that small variations in historical conditions have substantial consequences for both the spatial distribution and the efficiency of U.S. economic activity, both today and in the long-run.
    JEL: C33 C62 F1 R11 R13 R23
    Date: 2020–11
  2. By: Krenz, Astrid
    Abstract: Almost 30 years after German reunification, a persistent gap in different firm performance measures exists between East and West Germany. In this paper I focus on the differences in new German manufacturing plants' location choices across the German district-free cities and districts and investigate its regional determinants. For that purpose, I construct a novel, rich regional- and plant-level dataset based on the Official Firm Statistics from the German Federal Statistical Office and the Offices of the Laender. The analysis provides first-time evidence regarding how in particular the location decision of plants in the German economy is in uenced by regional road infrastructure as well as regional structural funding. The effects are economically important and significant. The results reveal that a 10 percent increase in plant agglomeration increases the odds of a new plant to locate in the region by 12 percent. A 10 percent decrease of travel time on roads increases the odds of a plant to locate by 4 percent in Germany overall, by 7.6 percent among East German regions and by 26.5 percent in particular for large plants in the East German regions. A 10 percent larger population increases the odds to locate by 8.7 percent. A 10 percent increase in regional structural funding for infrastructure purposes increases the odds to locate in a region in East Germany by 8.3 percent in particular for large plants. Policy implications emerge that address in particular the improvement of infrastructure and support to reap the benefits that arise from agglomeration externalities.
    Keywords: Firm location choice,regional road infrastructure,Germany,agglomeration economies,regional structural funding,East-West gap,conditional logit,nested logit.
    JEL: D22 L25 R11 R12
    Date: 2020
  3. By: Steven Brakman; Tijl Hendrich; Charles van Marrewijk; Jennifer Olsen
    Abstract: The trade literature often treats countries as dimensionless points, which is a strong assumption. Agglomeration or lumpiness of production factors within countries can affect the national pattern of trade. In this paper we analyze comparative advantage patterns for 22 cities and 4 regions for (a selection of) 83 sectors within The Netherlands. Our findings are as follows. First, analysis of the lens condition indicates that the regional concentration of production factors (lumpiness) does not affect the Dutch national trade pattern. This suggests that the mobility of firms and factors of production is consistent with the so-called welfare maximizing integrated equilibrium. Second, despite the fact that the lens condition is verified, comparative advantage patterns across locations differ significantly from each other. We show this by comparing location specific distributions of the Balassa-Index (BI). Third, the differences across locations of comparative advantage patterns is determined by the interaction of local skill-abundance and sector skill-intensity, in line with the predictions of the factor abundance model. Moreover, at the sectoral level, location-specific variables such as market access or density, have limited effects. Fourth, most locations that house sectors that have a strong comparative (dis-) advantage relative to the Netherlands also have a strong comparative (dis-) advantage relative to the world. Only a few locations house sectors that are locally strong, but globally weak, and vice versa. The results indicate that international trade policies and disputes, such as Brexit or the US-China trade war, can have strong local consequences.
    Keywords: comparative advantage, cities, Heckscher-Ohlin, factor abundance
    JEL: F11 F15 R12
    Date: 2020
  4. By: Umbach, Tim
    Abstract: Much research has been done showing that unemployment can cause crime, and that crime adversely impacts economic activity. However, very few authors have considered a simultaneous relationship. Using an IV-setup and regional panel-data, I find evidence for the possibility of a vicious cycle, with unemployment leading to higher crime rates and crime rates raising unemployment. I further find that especially employment in low-skill service jobs is adversely affected by crime, that many types of crime are impacted by unemployment differently and that both apartment rents and GDP-growth decrease if crime increases. The spatial dependencies found further raise the possibility that these vicious cycles could spill over into neighboring regions.
    Keywords: Crime,Unemployment,Amenities,spatial autregresssive model,SARAR,endogenous regessors.
    JEL: J21 J32 K42 R11 R23 R30
    Date: 2020
  5. By: Batabyal, Amitrajeet; Higano, Yoshiro; Nijkamp, Peter
    Abstract: Following this introductory chapter which comprises Part I of the book, there are eleven chapters and each of these chapters—written by an expert or by a team of experts—discusses a particular research question or questions about rural-urban dichotomies and spatial development in Asia. For ease of comprehension, we have divided the present volume containing twelve chapters into five parts. Part II of this book focuses on migration and this part consists of two chapters. Part III concentrates on the provision of goods and services and this part of the book consists of three chapters. Part IV focuses on conflict and this part consists of two chapters. The focus of the four chapters that comprise part V of this book is on reforms and their impacts.
    Keywords: Asia, Regional Impacts, Rural-Urban Dichotomy, Spatial Economic Development
    JEL: R11 R23 R28
    Date: 2020–10–29
  6. By: J. Vernon Henderson; Adam Storeygard; David N. Weil
    Abstract: Quality-adjusted population density (QAPD) is population divided by land area that has been adjusted for geographic characteristics. We derive weights on these geographic characteristics from a global regression of population density at the quarter-degree level with country fixed effects. We show, first, that while income per capita is uncorrelated with conventionally measured population density across countries, there is a strong negative correlation between income per capita and QAPD; second, that the magnitude of this relationship exceeds the plausible structural effect of density on income, suggesting a negative correlation between QAPD and productivity or factor accumulation; and third, that higher QAPD in poor countries is primarily due to population growth since 1820. We argue that these facts are best understood as results of the differential timings of economic takeoff and demographic transition across countries, and particularly the rapid transfer of health technologies from early to late developers.
    JEL: O13 O18 Q56 R12
    Date: 2020–11
  7. By: Julie Le Gallo (CESAER - Centre d'Economie et de Sociologie Rurales Appliquées à l'Agriculture et aux Espaces Ruraux - AgroSup Dijon - Institut National Supérieur des Sciences Agronomiques, de l'Alimentation et de l'Environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Youba Ndiaye (CESAER - Centre d'Economie et de Sociologie Rurales Appliquées à l'Agriculture et aux Espaces Ruraux - AgroSup Dijon - Institut National Supérieur des Sciences Agronomiques, de l'Alimentation et de l'Environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: How do countries respond to other countries when setting the level of their environmental expenditures? Using data from 1995-2017 on a sample of 28 OECD countries, we examine the nature and extent of strategic interactions in environmental expenditures among OECD countries using a spatial Durbin model including economic and political control variables and both economic and spatial weight matrices reflecting several interaction mechanisms. The results show the existence of significant positive spatial dependence in environmental spending suggesting that OECD countries consider their neighbors' behavior when making policy choices related to environmental expenditures. We also find that the most populous countries or those with high unemployment tend to spend less for environment while countries with a large urban population set higher levels of environmental expenditures. The results are robust to the inclusion of strong cross-sectional dependence under the form of common factors.
    Keywords: Environmental expenditure,Strategic interaction,Spatial econometrics,Common factors
    Date: 2021–01
  8. By: Huning, Thilo R.; Wahl, Fabian
    Abstract: How can agricultural inheritance traditions affect structural change and economic development in rural areas? The most prominent historical traditions are primogeniture, where the oldest son inherits the whole farm, and equal partition, where land is split and each heir inherits an equal share. In this paper, we provide a theoretical model that links these inheritance traditions to the local allocation of labor and capital and to municipal development. First, we show that among contemporary municipalities inWest Germany, equal partition is significantly related to measures of economic development. Second, we conduct OLS and fuzzy spatial RDD estimates for Baden-Württemberg in the 1950s and today. We find that inheritance rules caused, in line with our theoretical predictions, higher incomes, population densities, and industrialization levels in areas with equal partition. Results suggest that more than a third of the overall inter-regional difference in average per capita income in present-day Baden Württemberg, or 597 Euro, can be explained by equal partition.
    Keywords: Inheritance rules,sectoral change,regional economic development,Baden-Württemberg,spatial inequalities
    JEL: D02 D31 N00 O18 Z00
    Date: 2020
  9. By: Michael Pollmann
    Abstract: I propose a framework, estimators, and inference procedures for the analysis of causal effects in a setting with spatial treatments. Many events and policies (treatments), such as opening of businesses, building of hospitals, and sources of pollution, occur at specific spatial locations, with researchers interested in their effects on nearby individuals or businesses (outcome units). However, the existing treatment effects literature primarily considers treatments that could be assigned directly at the level of the outcome units, potentially with spillover effects. I approach the spatial treatment setting from a similar experimental perspective: What ideal experiment would we design to estimate the causal effects of spatial treatments? This perspective motivates a comparison between individuals near realized treatment locations and individuals near unrealized candidate locations, which is distinct from current empirical practice. Furthermore, I show how to find such candidate locations and apply the proposed methods with observational data. I apply the proposed methods to study the causal effects of grocery stores on foot traffic to nearby businesses during COVID-19 lockdowns.
    Date: 2020–10
  10. By: Esther Rolf; Jonathan Proctor; Tamma Carleton; Ian Bolliger; Vaishaal Shankar; Miyabi Ishihara; Benjamin Recht; Solomon Hsiang
    Abstract: Combining satellite imagery with machine learning (SIML) has the potential to address global challenges by remotely estimating socioeconomic and environmental conditions in data-poor regions, yet the resource requirements of SIML limit its accessibility and use. We show that a single encoding of satellite imagery can generalize across diverse prediction tasks (e.g. forest cover, house price, road length). Our method achieves accuracy competitive with deep neural networks at orders of magnitude lower computational cost, scales globally, delivers label super-resolution predictions, and facilitates characterizations of uncertainty. Since image encodings are shared across tasks, they can be centrally computed and distributed to unlimited researchers, who need only fit a linear regression to their own ground truth data in order to achieve state-of-the-art SIML performance.
    JEL: C02 C8 O13 O18 Q5 R1
    Date: 2020–11
  11. By: Tobias Chilla (Universitätsklinikum Erlangen [Erlangen]); Anna Heugel (Universitätsklinikum Erlangen [Erlangen]); Thomas Streifeneder (EURAC Research); Elisa Ravazzoli (EURAC Research); Peter Laner (EURAC Research); Ulrike Tappeiner (EURAC Research); Francesca Teston (EURAC Research); Lukas Egarter (EURAC Research); Thomas Dax (Federal Institute for Less Favoured and Mountainous Areas); Ingrid Machold (Federal Institute for Less Favoured and Mountainous Areas); Marco Pütz (Swiss Federal Institute for Forest, Snow and Landscape Research WSL); Naja Marot (University of Ljubljana); Jean-François Ruault (UR LESSEM - Laboratoire des EcoSystèmes et des Sociétés en Montagne - IRSTEA - Institut national de recherche en sciences et technologies pour l'environnement et l'agriculture)
    Abstract: If you want to know how the Alps area will look like in 2050 our ESPON project Alps 2050 is the best source of information. The project focused on the challenges the broader Alpine area is facing such as specific geographical position, globalisation, demographic trends, climate change and its impact on the environment, biodiversity, territorial pattern of activities and living conditions. The major challenge for the Alpine area is to balance economic development and environmental protection in a way that will ensure quality and sustainable living standards for its inhabitants. The Alps 2050 project developed a unique atlas, to project these challenges and develop spatial visions and perspectives for the Alpine region towards the year 2050. It visualises the existing data from the project that show structures, patterns and trends that contextualise the spatial development, to fuel the debate on territorial development in the Alps. What is evident when reading the Atlas is that the Alpine region is certainly a very dynamic region offering multiple opportunities for future development without focusing solely on growth dynamic. But the territorial development in the Alpine Region is complex and diverse. Different maps tell different stories as sometimes it is the morphological context that sets the picture, the contrast between urban and rural areas or the differences between North and South or East and West. This complexity underlines the fact that spatial development is not determined only by mountains and morphology, it is equally a political process open for political struggles, societal debates and democratic decisions. Policymakers should consider this reality in their designing of territorial strategies. From a transnational perspective, the parallels can be perceived as common challenges that stand in the heart of macro-regional strategy implementation. At the same time, regional and national differences can be a potential for diversity, best developed on political levels of the European multi-level system in subsidiarity.
    Date: 2019

This nep-geo issue is ©2020 by Andreas Koch. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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