nep-geo New Economics Papers
on Economic Geography
Issue of 2021‒02‒15
fourteen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. On the productivity advantage of cities By Nick Jacob; Giordano Mion
  2. Local Amenities, Commuting Costs and Income Disparities Within Cities By Morgan Ubeda
  3. Globalisation and urban polarisation By Anthony J. Venables
  4. Elementary Facts About Immigration in Italy. What Do We Know About Immigration and Its Impact By Rama Dasi Mariani; Alessandra Pasquini; Furio Camillo Rosati
  5. Spillover Effects from New Housing Supply By Nicolás González-Pampillón
  6. Local Labor Market Impacts of Advanced Manufacturing Technologies: Evidence from European Nuts-3 Regions. By Orsatti, Gianluca; Quatraro, Francesco
  7. The contribution of immigration to local labor market adjustment By Michael Amior
  8. Immigration, local crowd-out and undercoverage bias By Michael Amior
  9. The Legacy of Literacy: Evidence from Italian Regions By Roberto Basile; Carlo Ciccarelli; Peter Groote
  10. Is Regional Trade Integration a Growth and Convergence Engine in Africa? By Vigninou Gammadigbe
  11. Trends in U.S. Spatial Inequality: Concentrating Affluence and a Democratization of Poverty By Cecile Gaubert; Patrick M. Kline; Damián Vergara; Danny Yagan
  12. All aboard: the effects of port development By Ducruet, César; Juhasz, Reka; Krisztián, Dávid; Steinwender, Claudia
  13. Productivity, Place, and Plants: Revisiting the Measurement By Benjamin Schoefer; Oren Ziv
  14. Working from Home: Too Much of a Good Thing? By Kristian Behrens; Sergey Kichko; Jacques-Francois Thisse

  1. By: Nick Jacob; Giordano Mion
    Abstract: Ever since Marshall (1890) agglomeration externalities have been viewed as the key factor explaining the existence of cities and their size. However, while the various micro foundations of agglomeration externalities stress the importance of Total Factor Productivity (TFP), the empirical evidence on agglomeration externalities rests on measures obtained using firm revenue or value-added as a measure of firm output: revenue-based TFP (TFP-R). This paper uses data on French manufacturing firms' revenue, quantity and prices to estimate TFP and TFP-R and decompose the latter into various elements. Our analysis suggests that the revenue productivity advantage of denser areas is mainly driven by higher prices charged rather than differences in TFP. At the same time, firms in denser areas are able to sell higher quantities, and generate higher revenues, despite higher prices. These and other results we document suggest that firms in denser areas are able to charge higher prices because they sell higher demand/quality products. Finally, while the correlation between firm revenue TFP and firm size is positive in each location, it is also systematically related to density: firms with higher (lower) TFP-R account for a larger (smaller) share of total revenue in denser areas. These patterns thus amplify in aggregate regional-level figures any firm-level differences in productivity across space.
    Keywords: total factor productivity (TFP), density, agglomeration externalities, revenue-based TFP, prices, demand, quality
    JEL: R12 R15 D24 L11
    Date: 2020–04
  2. By: Morgan Ubeda (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - Centre National de la Recherche Scientifique - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UL2 - Université Lumière - Lyon 2 - ENS Lyon - École normale supérieure - Lyon)
    Abstract: This paper studies the effect of transportation networks on spatial inequality within metropolitan areas. It uses a spatial equilibrium model featuring nonhomotheticities and worker heterogeneity, allowing to capture rich patterns of workers sorting on commuting costs and amenities. The model is calibrated for the Paris urban area. Counterfactual simulations study the effects of a) the Regional Express Rail and b) restricting car use in the city center. Despite a strong contribution to suburbanization and reducing welfare inequality, the public transport network plays no role in reducing income segregation. The effects of banning cars depends critically on the response of residential amenities in the city. If it is low enough, it reduces income disparities between Paris and its suburbs at the cost of a substantial welfare loss. If it is high enough, the policy creates welfare gains but steepens the income gradient.
    Keywords: commuting,amenities,income sorting,stratification commuting,stratification
    Date: 2020
  3. By: Anthony J. Venables
    Abstract: External trade affects the internal spatial structure of an economy, promoting growth in some cities or regions and decline in others. Internal adjustment to these changes has often proved to be extremely slow and painful. This paper combines elements of urban and international economics to draw out the implications of trade shocks for city performance. Localisation economies in production of internationally tradable goods mean that cities divide into two types, those producing tradables and those specialising in sectors producing just for the national market (non-tradables). Negative trade shocks (and possibly also some positive ones) reduce the number of cities engaged in tradable production, increasing the number producing just non-tradables. This has a negative effect across all non-tradable cities, which lose population and land value. Remaining tradable cities boom, gaining population and land value. Depending on the initial position, city size dispersion may increase, this raising the share of urban land-rents in national income and reducing the share of labour.
    Keywords: Globalisation, urban, de-industrialisation, rustbelt, polarisation
    JEL: F12 R11 R12
    Date: 2020–07
  4. By: Rama Dasi Mariani (CEIS, Università di Roma "Tor Vergata"); Alessandra Pasquini (CEIS, Università di Roma "Tor Vergata"); Furio Camillo Rosati (DEF and CEIS, Università di Roma "Tor Vergata")
    Abstract: In the recent past, in Italy, immigration has been at the centre of academic and policy debates. Nonetheless, the still growing literature has focused mainly on the experience of old settlement countries and has mainly looked at single aspects of the phenomenon. In order to guide effective policy intervention, we offer an exhaustive view of immigration in Italy. We combine the presentation of stylized facts from available data, based on descriptive analyses, with a review of existing studies. Our conclusions tell that evidence available for Italy does not match the policy relevance of an issue that has been dominating the public debate in the last years and also identify areas where solid evidence or analysis is needed.
    Keywords: Immigration, Mobility, Integration, Education, Regional Labour Market
    JEL: F22 I24 J15 J61 R23
    Date: 2020–05–28
  5. By: Nicolás González-Pampillón
    Abstract: I estimate spillovers from new housing supply on house prices, crime rates, and household income. To estimate these effects, I use exogenous variation in supply induced by a housing subsidy implemented in middle-income neighborhoods in the city of Montevideo. The program incentivized residential development through tax breaks that led to sizable investments in certain neighborhoods. I exploit the spatial structure of the scheme to identify the externalities and find clear evidence of spillovers from new supply on house prices, with prices increasing between 12 and 17%. Property crime rates only decreased in the short term, while there is evidence of an increase in household income, suggesting that the neighborhood income mix responded to the supply expansion. Increasing supply appears to revitalize neighborhoods, but these effects also reduce housing affordability.
    Keywords: housing supply, House prices, neighborhood change, crime, difference-in-differences, Housing policies
    JEL: R23 R30 R58
    Date: 2019–11
  6. By: Orsatti, Gianluca; Quatraro, Francesco (University of Turin)
    Abstract: Based on the established literature about substitution and compensation effects, this paper provides one of the first analyses of the relationship between digital technologies and employment at the regional level in Europe. We posit that idiosyncratic factors of local labor markets are likely to generate place- specific responses to the introduction of new technologies. Spatial spillovers are also likely to emerge. The geographical level of analysis is therefore the most appropriate. Our analysis confirms that there is a significant relationship between the local specialization in advanced manufacturing technologies and employment. Mainly driven by automation-related technologies, we indeed estimate negative effects of advanced manufacturing technologies on local employment creation. Conversely, digital technologies play a positive role in enhancing local labor productivity. Finally, technological performances of neighbour regions play a significant role in shaping local labor productivity, while not significantly affecting local employment creation.
    Date: 2020–11
  7. By: Michael Amior
    Abstract: The US suffers from persistent regional disparities in employment rates. In principle, these disparities should be eliminated by population mobility. Can immigration fulfil this role? Remarkably, since 1960, I show that new migrants from abroad account for 40% of the average population response to these disparities - which vastly exceeds their historic share of gross migratory flows. But despite this, immigration does not significantly accelerate local population adjustment (or reduce local employment rate disparities), as it crowds out the contribution from internal mobility. Indeed, this crowd-out can help account for the concurrent decline in internal mobility. Finally, I attribute the "excess" foreign contribution to a local snowballing effect, driven by persistent local shocks and the dynamics of migrant enclaves. This mechanism raises challenges to the (pervasive) application of migrant enclaves as an instrument for foreign inflows. But rather than abandoning the instrument, I offer an empirical strategy (motivated by my model) to overcome these challenges; and I demonstrate its efficacy.
    Keywords: immigration, geographical mobility, local labor markets, employment
    JEL: J61 J64 R23
    Date: 2020–02
  8. By: Michael Amior
    Abstract: Using decadal census data since 1960, I cannot reject the hypothesis that new immigrants crowd out existing residents from US commuting zones and states one-for-one. My estimate is precise and robust to numerous specifications, as well as accounting for local dynamics; and I show how it can be reconciled with apparently conflicting results in the literature. Exploiting my model's structure, I attribute 30% of the observed effect to mismeasurement, specifically undercoverage of immigrants. Though labor demand does respond, population mobility accounts for 90% of local adjustment. These results have important implications for both structural and reduced form estimation of immigration effects.
    Keywords: immigration, geographical mobility, local labor markets, employment
    JEL: J61 J64 R23
    Date: 2020–01
  9. By: Roberto Basile (University of L'Aquila); Carlo Ciccarelli (CEIS & DEF, University of Rome "Tor Vergata"); Peter Groote (Faculty of Spatial Sciences,Groningen)
    Abstract: Italy was unified in 1861. As part of the process of nation-building, a free and mandatory national primary school system was established. While the new school system greatly contributed to the modernization of the country, its initial design did not reduce considerably regional disparities in human capital, with Southern regions lagging behind. The paper studies the effect of the heterogeneous territorial diffusion of literacy during the postunification period (1871-1911) on economic and social outcomes of Italian provinces 100 years later. We exploit the exogenous variations in the territorial spread in literacy rates arising from the gradual building and expansion of the railway network across provinces. We find evidence that provinces with a higher territorial diffusion of primary education in the post-unification period have today higher income per capita, less unemployment, and greater educational attainment. The evidence in terms of social capital outcomes is instead mixed, depending on the indicator considered.
    Keywords: Education, long-term effects, regions, Italy.
    JEL: J24 H75 R12 N13
    Date: 2020–06–19
  10. By: Vigninou Gammadigbe
    Abstract: The main objective of Regional Trade Agreements (RTAs) is to stimulate economic growth in participating countries through increased trade, economies of scale, knowledge and technology transfer. Using a panel data over the period 1979 to 2018, this paper examines the contribution of regional trade integration (RTI) to economic growth and income convergence in Africa and its major Regional Economic Communities (RECs). The results of the instrumental variable and panel fixed-effects estimation show that RTI promotes economic growth in Africa. However, it fosters income divergence, reflecting the distribution of the gains from regional integration in favor of the more developed economies of the continent. The results of this study show the importance to support the African Continental Free Trade Area (AfCFTA) project with policies aimed at reducing non-tariff barriers to trade and improving infrastructure in order to maximize the effects on growth in all participating countries.
    Date: 2021–01–29
  11. By: Cecile Gaubert; Patrick M. Kline; Damián Vergara; Danny Yagan
    Abstract: We study trends in income inequality across U.S. states and counties 1960-2019 using a mix of administrative and survey data sources. Both states and counties have diverged in terms of per-capita pre-tax incomes since the late 1990s, with transfers serving to dampen this divergence. County incomes have been diverging since the late 1970s. These trends in mean income mask opposing patterns among top and bottom income quantiles. Top incomes have diverged markedly across states since the late 1970s. In contrast, bottom income quantiles and poverty rates have converged across areas in recent decades.
    JEL: E01 H2 R1
    Date: 2021–01
  12. By: Ducruet, César; Juhasz, Reka; Krisztián, Dávid; Steinwender, Claudia
    Abstract: This paper examines the effects of port development on the economy. By using scarce local land intensively, ports put pressure on local land prices and crowd out other forms of economic activity. We use the introduction of containerized shipping -- a technology that substantially increased land requirements at the port -- to estimate the effects of port development. We find an important role for the crowding-out effect both at the local and at the aggregate level. First, we show that the causal effect of the shipping boom caused by containerization on local population is zero -- port development increases city population by making a location more attractive for firms and consumers, but this well-known market access effect is fully offset by the crowding-out mechanism. Second, to measure the aggregate implications, we add endogenous port development to a standard quantitative model of cross-city trade. Through the lens of this model, we estimate that containerization increased aggregate world welfare by 3.95%. However, relative to the positive welfare effects of a trade-cost reduction in standard models, our model implies a sizeable welfare cost associated with the increased land-usage of ports, partly offset by welfare gains from endogenous specialization based on comparative advantage across port- and non-port activities. In terms of the distributional effects, we find that initially poorer countries gained more from containerization as they had a comparative advantage in port development.
    Keywords: port development; containerization; quantitative economic geography
    JEL: R40 O33
    Date: 2020–12
  13. By: Benjamin Schoefer; Oren Ziv
    Abstract: Why do cities differ so much in productivity? We document that most of the measured dispersion in productivity across US cities is spurious and reflects granularity bias: idiosyncratic heterogeneity in plant-level productivity and size, combined with finite plant counts. As a result, economies with randomly reallocated plants exhibit nearly as high a variance as the empirical economy. Stripping out this bias using our nonparametric split-sample strategy reduces the raw variance of place effects by about two thirds to three quarters. For new plants, about four fifths of the dispersion reflects granularity bias, and new plants’ place effects are only imperfectly correlated with those of older plants. These US-based patterns broadly extend to the 15 European countries we study in internationally comparable firm-level data.
    Keywords: productivity, urban economics, firm heterogeneity
    JEL: R12 D24 L11
    Date: 2021
  14. By: Kristian Behrens; Sergey Kichko; Jacques-Francois Thisse
    Abstract: We develop a general equilibrium model with three primary production factors—land, skilled, and unskilled labor—and three sectors—construction, intermediate inputs, and final consump-tion—to study how different intensities of telecommuting affect the efficiency of firms that embrace home working, as well as its impact on the whole economy. In doing so, we pay particular attention to the effects of increasing working from home (WFH) that go through changes in the production and consumption of buildings: more WFH reduces firms’ demands for office space, but increases workers’ demand for living space since additional room is re-quired to work from home. We find that more WFH is a mixed blessing: the relationship between telecommuting and productivity or GDP is ∩-shaped, whereas telecommuting raises income inequality. Hence, WFH is not a panacea since an excessive downscaling of workspaces may be damaging to all and exacerbate economic inequality.
    Keywords: working from home, alternative work arrangements, telecommuting, housing and office markets, land
    JEL: J20 R13 R14
    Date: 2021

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