nep-geo New Economics Papers
on Economic Geography
Issue of 2020‒12‒07
nine papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. I will survive! The impact of place-based policies when public transfers fade out By Augusto Cerqua; Guido Pellegrini
  2. Age cohort effects on unemployment in the US: Evidence from the regional level By Ochsen, Carsten
  3. Institutions and the uneven geography of the first wave of the COVID-19 pandemic By Rodríguez-Pose, Andrés; Burlina, Chiara
  4. Local sectoral specialization in a warming world By Bruno Conte; Klaus Desmet; David Krisztián Nagy; Esteban Rossi-Hansberg
  5. Multinationals, industrial relatedness and employment in European regions By Cortinovis, Nicola; Crescenzi, Riccardo; Van Oort, Frank
  6. Credit constraints, labor productivity and the role of regional institutions: evidence for manufacturing firms in Europe By Rodríguez-Pose, Andrés; Ganau, Roberto; Maslauskaite, Kristina; Brezzi, Monica
  7. Public Finance, Government Spending and Economic Growth: The Case of Local Governments in Italy. By Agasisti, Tommaso; Barra,Cristian; Zotti, Roberto
  8. Distance-based measures of spatial concentration: Introducing a relative density function By Gabriel Lang; Eric Marcon; Florence Puech
  9. Die Bedeutung der regionalen Wirtschaftsstruktur für die Arbeitsmarkteffekte der Corona-Pandemie - Eine erste Einschätzung By Böhme, Stefan; Burkert, Carola; Carstensen, Jeanette; Eigenhüller, Lutz; Niebuhr, Annekatrin; Roth, Duncan; Sieglen, Georg; Wiethölter, Doris

  1. By: Augusto Cerqua (Department of Social Sciences and Economics, Sapienza University of Rome); Guido Pellegrini (Department of Social Sciences and Economics, Sapienza University of Rome)
    Abstract: Are place-based policies capable of taking lagging areas to a higher growth trajectory permanently? We answer this key question by investigating what happens when strongly subsidised regions suddenly experience a substantial reduction in external funding. We analyse an extensive database and estimate the average causal impact of exiting the convergence region status of the EU regional policy via the mean balancing approach, an econometric technique created appositely to fully exploit time-series cross-sectional data. Such an approach also allows us to investigate the heterogeneity of the impact concerning relevant covariates. We find that regions which experienced a considerable reduction in funding in a period of economic expansion did not suffer from the loss of such funding. On the other hand, we find that the sharp reduction in funding during the crisis led to a negative, but not statistically significant, impact on economic growth. However, the impact varies with the features of the regions and the local economic context. These findings differ from previous literature and signal a long-term positive effect of the EU funds on growth and employment.
    Keywords: Place-based policy, European Union, mean balancing, regional growth
    JEL: C23 O47 R11
    Date: 2020–11
  2. By: Ochsen, Carsten
    Abstract: Since the early 1970s, it was argued that shifts from relatively smaller to larger youth cohorts in the labor force raise the unemploy- ment rate. In contrast, Shimer (2001) comes to a contrary conclusion using US state level data. I provide a theoretical framework for local labor markets that considers age cohort differences in labor market characteristics. Using a spatial panel data model and US county level data (2000-2014), the estimates provide strong evidence that aging of the working age population reduces overall unemployment by almost one percentage point. Long-run effects that consider local feedbacks are even larger.
    Keywords: Regional Unemployment,Spatial Interactions,Aging,Panel Data,Spatial Model
    JEL: J60 R12 J10 C23
    Date: 2020
  3. By: Rodríguez-Pose, Andrés; Burlina, Chiara
    Abstract: This paper examines the uneven geography of COVID-19-related excess mortality during the first wave of the pandemic in Europe, before assessing the factors behind the geographical differences in impact. The analysis of 206 regions across 23 European countries reveals a distinct COVID-19 geography. Excess deaths were concentrated in a limited number of regions —expected deaths exceeded 20% in just 16 regions— with more than 40% of the regions considered experiencing no excess mortality during the first six months of 2020. Highly connected regions, in colder and dryer climates, with high air pollution levels, and relatively poorly endowed health systems witnessed the highest incidence of excess mortality. Institutional factors also played an important role. The first wave hit regions with a combination of weak and declining formal institutional quality and fragile informal institutions hardest. Low and declining national government effectiveness, together with a limited capacity to reach out across societal divides, and a frequent tendency to meet with friends and family were powerful drivers of regional excess mortality.
    Keywords: Covid-19; pandemic; institutions; regions; Europe; coronavirus
    JEL: H75 R58
    Date: 2020–11
  4. By: Bruno Conte; Klaus Desmet; David Krisztián Nagy; Esteban Rossi-Hansberg
    Abstract: This paper quantitatively assesses the world's changing economic geography and sectoral specialization due to global warming. It proposes a two-sector dynamic spatial growth model that incorporates the relation between economic activity, carbon emissions, and temperature. The model is taken to the data at the 1 degree by 1 degree resolution for the entire world. Over a 200-year horizon, rising temperatures consistent with emissions under Representative Concentration Pathway 8.5 push people and economic activity northwards to Siberia, Canada, and Scandinavia. Compared to a world without climate change, clusters of agricultural specialization shift from Central Africa, Brazil, and India's Ganges Valley, to Central Asia, parts of China and northern Canada. Equatorial latitudes that lose agriculture specialize more in nonagriculture but, due to their persistently low productivity, lose population. By the year 2200, predicted losses in real GDP and utility are 6% and 15%, respectively. Higher trade costs make adaptation through changes in sectoral specialization more costly, leading to less geographic concentration in agriculture and larger climate-induced migration.
    Date: 2020–11
  5. By: Cortinovis, Nicola; Crescenzi, Riccardo; Van Oort, Frank
    Abstract: This paper investigates the link between multinational enterprises (MNEs) and employment in their host regions by cross-fertilizing the literature on MNE externalities with the emerging body of research on industrial relatedness. The link between employment and MNE presence in the same and related industries is tested for European regions. The results suggest that cross-sectoral MNE spillovers are mediated through industrial relatedness and that they are positively and significantly associated with higher employment levels, independently of input-output relations. Our results indicate that regions characterized by lower factor prices are likely to benefit the most from the presence of multinationals in terms of employment, but these benefits are concentrated in high knowledge-intensive sectors, potentially fostering inequalities within less developed economies.
    Keywords: employment; foreign direct investment; relatedness; Europe; regions; 639633-MASSIVE-ERC-2014-STG)
    JEL: O33 F22
    Date: 2020–09–01
  6. By: Rodríguez-Pose, Andrés; Ganau, Roberto; Maslauskaite, Kristina; Brezzi, Monica
    Abstract: This paper examines the relationship between credit constraints - proxied by the investment-to-cash flow sensitivity – and firm-level economic performance - defined in terms of labor productivity – during the period 2009-2016, using a sample of 22,380 manufacturing firms from 11 European countries. It also assesses how regional institutional quality affects productivity at the level of the firm both directly and indirectly. The empirical results highlight that credit rationing is rife and represents a serious barrier for improvements in firm-level productivity and that this effect is far greater for micro and small than for larger firms. Moreover, high-quality regional institutions foster productivity and help mitigate the negative credit constraints-labor productivity relationship that limits the economic performance of European firms. Dealing with the European productivity conundrum thus requires greater attention to existing credit constraints for micro and small firms, although in many areas of Europe access to credit will become more effective if institutional quality is improved.
    Keywords: credit constraints; labor productivity; manufacturing firms; regional institutions; cross-country analysis; Europe
    JEL: C23 D24 G32 H41 R12
    Date: 2020–11
  7. By: Agasisti, Tommaso; Barra,Cristian; Zotti, Roberto (University of Turin)
    Abstract: This paper contributes to the empirical literature on the linkages between decentralized government spending, public finances, and economic growth at the local level. The impact of local government spending on output growth is estimated using a panel of Italian Labor Market Areas - a group of municipalities adjacent to each other, geographically and statistically comparable, characterized by common commuting ows of the working population - during the 2002-2012 period. The attention is focused both on current and capital expenditures as well as on several spending categories. To handle endogeneity problems between public spending and economic development, a system generalized method of moments has been used. The findings indicate a fairly robust negative relationship between local current government expenditure and economic growth. Investment in capital budget turns out to be not statistically significant when the public spending composition is taken into account. Municipalities located in central-southern regions show, instead, negative growth e ect of capital spending, underlining the importance of measuring the efficiency of public spending rather than just being concerned with the absolute level of output. Only few of the expenditure categories (Justice, Tourism and Culture) exhibit positive effects on growth, while Administration & Management and Roads & Transportation have negative growth effect in southern regions.
    Date: 2020–10
  8. By: Gabriel Lang (MIA-Paris - Mathématiques et Informatique Appliquées - AgroParisTech - INRA - Institut National de la Recherche Agronomique); Eric Marcon (UMR ECOFOG - Ecologie des forêts de Guyane - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - INRA - Institut National de la Recherche Agronomique - AgroParisTech - UG - Université de Guyane - CNRS - Centre National de la Recherche Scientifique - UA - Université des Antilles); Florence Puech (RITM - Réseaux Innovation Territoires et Mondialisation - UP11 - Université Paris-Sud - Paris 11)
    Abstract: For a decade, distance-based methods have been widely employed and constantly improved in the field of spatial economics. These methods are a very useful tool for accurately evaluating the spatial distribution of plants or retail stores, for example (Duranton and Overman, 2008). In this paper, we introduce a new distance-based statistical measure for evaluating the spatial concentration of economic activities. To our knowledge, the m function is the first relative density function to be proposed in the economics literature. This tool supplements the typology of distance-based methods recently drawn up by Marcon and Puech (2012). By considering several theoretical and empirical examples, we show the advantages and the limits of the m function for detecting spatial structures in economics.
    Keywords: Agglomeration,Aggregation,Spatial Concentration,Point Patterns,Economic Geography
    Date: 2019–10–24
  9. By: Böhme, Stefan (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Burkert, Carola (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Carstensen, Jeanette (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Eigenhüller, Lutz (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Niebuhr, Annekatrin (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Roth, Duncan (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Sieglen, Georg (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Wiethölter, Doris (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "The ongoing corona crisis has led to an unprecedented increase in the take-up of short-time work. At the same time, unemployment has increased considerably. Far less attention has been paid to the regional differences in the corona-induced impact on the flows between unemployment and employment. The so-called 'corona effect', which is defined as the difference in the annual change of the inflow rate from employment to unemployment and the outflow rate from unemployment into employment, varies considerably across regions. Based on the results of a regression analysis, we find a strong association between the size of the corona effect and the regional sector structure. In particular, regions with a higher fraction of workers employed in sectors that were the most strongly affected by the shutdown measures that were implemented at the start of the pandemic have on average experienced a larger increase in the corona effect. Moreover, we also find that differences in the corona effect are related with the establishment size composition within the highly affected sector. We provide detailed evidence of how these associations develop over time and to what extent of the relation between the corona affect and the different regional measures are due to an association with changes in the inflow rate, the out-flow rate or both." (Author's abstract, IAB-Doku) ((en))
    Date: 2020–11–16

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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