nep-geo New Economics Papers
on Economic Geography
Issue of 2021‒05‒17
eighteen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Local Sectoral Specialization in a Warming World By Conte, Bruno; Desmet, Klaus; Nagy, Dávid Krisztián; Rossi-Hansberg, Esteban
  2. The role of COVID-19 in spatial reorganization: Some evidence from Germany By Ehlert, Andree; Wedemeier, Jan; Zahlmann, Tabea
  3. Combinatorial knowledge bases, proximity and agency across space: the case of the high-end medical device industry in Shanghai By Shuaijun Xue; Robert Hassink
  4. Tourism and economic growth: an application to coastal regions in the Mediterranean area By Nicola Camatti; Luca Salmasi; Jan van der Borg
  5. Quality of government and regional trade: Evidence from European Union regions By Barbero Jiménez, Javier; Madras, Giovanni; Rodríguez-Crespo, Ernesto; Rodríguez-Pose, Andrés
  6. Quality of life in a dynamic spatial model By Ahlfeldt, Gabriel; Bald, Fabrian; Roth, Duncan; Seidel, Tobias
  7. How 'smart' are Smart Specialisation strategies? By Di Cataldo, Marco; Monastiriotis, Vassilis; Rodríguez-Pose, Andrés
  8. Productivity, Place, and Plants: Revisiting the Measurement By Schoefer, Benjamin; Ziv, Oren
  9. Credit Constraints, Labor Productivity and the Role of Regional Institutions: Evidence from Manufacturing Firms in Europe By Brezzi, Monica; Ganau, Roberto; Maslauskaite, Kristina; Rodríguez-Pose, Andrés
  10. Difference-in-Differences Estimation with Spatial Spillovers By Kyle Butts
  11. All aboard: The effects of port development By Ducruet, Cesar; Juhász, Réka; Nagy, Dávid Krisztián; Steinwender, Claudia
  12. Racial and Ethnic Differences in the Financial Returns to Home Purchases from 2007 to 2020 By Matthew E. Kahn
  13. Measuring Inequality from Above By José García-Montalvo; Marta Reynal-Querol; Juan Carlos Muñoz Mora
  14. High Cost Lenders and the Geographic Concentration of Foreclosures By Stephen L. Ross; Yuan Wang
  15. The urban wage premium in imperfect labor markets By Boris, Hirsch; Jahn, Elke J.; Manning, Alan; Oberfichtner, Michael
  16. How Unique is Milwaukee's 53206? An Examination of Disaggregated Socioeconomic Characteristics Across the City and Beyond By Scott W. Hegerty
  17. Impacto de los efectos espaciales en la convergencia regional. Análisis departamental para la Argentina By Mauricio Talassino; Marcos Herrera Gómez
  18. Determinantes de la decisión de producción de Trigo ¿el vecino importa? By Ana Laura Chara; Jimena Vicentin Masaro

  1. By: Conte, Bruno; Desmet, Klaus; Nagy, Dávid Krisztián; Rossi-Hansberg, Esteban
    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 1º by 1º 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 non-agriculture 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.
    Keywords: Geography; Global Warming; growth; migration; sectoral specialization; Space; Trade
    JEL: F18 O13 O41 Q56 R11 R12
    Date: 2020–11
  2. By: Ehlert, Andree; Wedemeier, Jan; Zahlmann, Tabea
    Abstract: This paper analyzes the role of regional demographic, socioeconomic and political factors on changes in mobility during the COVID-19 pandemic. It provides new empirical evidence for the regional differentiation of lockdown measures and indicates a possible reorganization of spatial economic and social activities beyond the course of the pandemic. Spatial econometric models are analyzed using data from the 401 counties in Germany. Our results show that, for example, current high caseloads are negatively related to changes in mobility, whereas a region's socioeconomic composition and rural location have a positive effect. The political and economic implications of the findings are discussed.
    Keywords: economic geography,COVID-19 pandemic,lockdown,regional interaction,mobility,spatial econometrics
    JEL: R10 R11 R12
    Date: 2021
  3. By: Shuaijun Xue; Robert Hassink
    Abstract: Recently the knowledge base (KB) concept has been extended with combinational knowledge bases (CKB) in order to overcome the dichotomy between analytical, synthetic and symbolic KB. So far, however, empirical studies on these CKB have insufficiently focused on multi-scalar mechanisms, which is a gap we would like to fill with the help of this paper. Therefore, it aims at analyzing CKB from a proximity, agency and multi-scalar perspective. Through interviews with high-end medical device companies from Shanghai, findings show that, first, in this local industry a combination of analytical and synthetic knowledge prevail. Secondly, knowledge interactions differ at different spatial scales, which is strongly related to the characteristics of the local KB and the position of local knowledge in the global industrial knowledge value chain. Thirdly, in this industry cognitive proximity is the key factor facilitating combinatorial knowledge interactions at all spatial scales. Institutional and geographical proximity are obviously more important at the local scale. Fourthly, concerning the effect of agencies on proximities, place leadership and institutional entrepreneurship work respectively at the local and national level, while the role of innovative entrepreneurship is observed at all levels.
    Keywords: Combinational knowledge bases, proximity, agency, multi-scalar perspective
    Date: 2021
  4. By: Nicola Camatti (Department of Economics, University Of Venice Cà Foscari); Luca Salmasi (Catholic University, Department of Economics and Finance, Roma, Italy); Jan van der Borg (Department of Economics, University Of Venice Cà Foscari)
    Abstract: This paper describes regional touristic supply under the framework of territorial capital to understand which territorial assets are the most important for stimulating economic growth. We used spatial regression models to consider spatial dependencies among regions, and Bayesian Model Averaging to specify our models using only the most relevant territorial assets. We have focused on the Mediterranean coast. The results show that many of the variables considered in our models play an important role in predicting GDP, recognizing them as strategic in economic growth, as well as a variety of strictly tourist assets, such as cultural heritage and landscape.
    Keywords: tourism growth, territorial capital, tourism competitiveness, spillover effects, spatial regression models, Mediterranean area
    JEL: C11 L83 Z32 R11 R58
  5. By: Barbero Jiménez, Javier; Madras, Giovanni; Rodríguez-Crespo, Ernesto; Rodríguez-Pose, Andrés
    Abstract: This paper examines â?? using a novel database of regional trade flows between 267 European regions for 2013 â?? how government quality affects trade between European Union (EU) regions. The results of a structural gravity cross-sectional analysis of trade show that trade across EU regions is highly influenced by differences in regional government quality. This influence varies by sector of economic activity and by the level of economic development of the region. The results indicate that, if the less developed regions of the EU want to engage in greater interregional trade, improving their institutional quality is a must.
    Keywords: gravity model of trade; institutions; quality of government; regional policy; structural estimation; Trade
    JEL: E02 F15 R10
    Date: 2021–01
  6. By: Ahlfeldt, Gabriel; Bald, Fabrian; Roth, Duncan; Seidel, Tobias
    Abstract: We develop a dynamic spatial model in which heterogeneous workers are imperfectly mobile and forward-looking and yet all structural fundamentals can be inverted without assuming that the economy is in a stationary spatial equilibrium. Exploiting this novel feature of the model, we show that the canonical spatial equilibrium framework understates spatial quality-of-life differentials, the urban quality-of-life premium and the value of local non-marketed goods. Unlike the canonical spatial equilibrium framework, the model quantitatively accounts for local welfare effects that motivate many place-based policies seeking to improve quality of life.
    Keywords: COVID; Dynamic; Housing; migration; pollution; productivity; Quality of life; rents; spatial equilibrium; wages
    JEL: J2 J3 R2 R3 R5
    Date: 2020–12
  7. By: Di Cataldo, Marco; Monastiriotis, Vassilis; Rodríguez-Pose, Andrés
    Abstract: The introduction of Smart Specialisation (S3) as a fundamental pillar of the 2014 reform of the European Union (EU) Cohesion Policy has represented a significant strategic shift in European development intervention. S3 strategies are aimed at mobilising the economic potential of each country and region of the EU, by allowing a more place-based and bottom-up approach to development. However, despite the salience that S3 has acquired in a short period of time, there has been no European-wide evaluation of the extent to which S3 strategies truly reflect the economic characteristics and potential of the territories where they are being implemented. This paper examines the characteristics of S3 strategies across Europe â?? by focusing on their development axes, economic/scientific domains, and policy priorities â?? to assess whether this is the case. The results show that S3 strategies display a proliferation of objectives, a problem which particularly affects those areas with weaker government quality. Moreover, strategies are generally loosely connected with the intrinsic conditions of each region and mostly mimic what neighbouring areas are doing. The lack of more concise and focused S3 strategies is likely to undermine the effectiveness of what is, otherwise, a very interesting and worthwhile policy experiment.
    Keywords: EU policy; Europe; regions; Smart specialisation
    JEL: O52 R58
    Date: 2020–11
  8. By: Schoefer, Benjamin; Ziv, Oren
    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.
    JEL: D24 L11 R12
    Date: 2021–01
  9. By: Brezzi, Monica; Ganau, Roberto; Maslauskaite, Kristina; Rodríguez-Pose, Andrés
    Abstract: This paper examines the relationship between credit constraints â?? proxied by the investment-to-cash flow sensitivity â?? and firm-level economic performance â?? defined in terms of labor productivity â?? 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; Cross-Country Analysis; Europe; labor productivity; Manufacturing firms; Regional Institutions
    JEL: C23 D24 G32 H41 R12
    Date: 2020–11
  10. By: Kyle Butts
    Abstract: Empirical work often uses treatment assigned following geographic boundaries. When the effects of treatment cross over borders, classical difference-in-differences estimation produces biased estimates for the average treatment effect. In this paper, I introduce a potential outcomes framework to model spillover effects and decompose the estimate's bias in two parts: (1) the control group no longer identifies the counterfactual trend because their outcomes are affected by treatment and (2) changes in treated units' outcomes reflect the effect of their own treatment status and the effect from the treatment status of "close" units. I propose estimation strategies that can remove both sources of bias and semi-parametrically estimate the spillover effects themselves. I extend Callaway and Sant'Anna (2020) to allow for event-study estimates that control for spillovers. To highlight the importance of spillover effects, I revisit analyses of three place-based interventions.
    Date: 2021–05
  11. By: Ducruet, Cesar; Juhász, Réka; Nagy, Dávid Krisztián; 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: Containerization; Port Development; Quantitative Economic Geography
    JEL: F6 O33 R40
    Date: 2020–11
  12. By: Matthew E. Kahn
    Abstract: The racial and ethnic composition of home buyers varies across geographic locations. For example, Asians and Hispanics are much more likely to buy homes in California than Blacks and Blacks are more likely to buy homes in Georgia than other demographic groups. Home prices grow at different rates across geographic units such as counties or zip codes. Hedonic bundling inhibits buyers from purchasing shares of different homes and forming a spatially diversified housing portfolio. Spatial variation in purchases suggests that the average rate of return to housing varies across racial and ethnic groups. To test this claim, I construct a geographic shift-share index by combining Zillow geographic specific home price index data with HMDA micro data. The shift share calculations yield the average rate of return to home ownership by purchase year, and sale year for different demographic groups. Over the years 2007 to 2020, Blacks earned a lower rate of return on home purchases than Asians and Hispanics and the sample average. Within geographic areas, average loan differences across racial and ethnic groups are very small.
    JEL: R21 R3 R31
    Date: 2021–05
  13. By: José García-Montalvo; Marta Reynal-Querol; Juan Carlos Muñoz Mora
    Abstract: Recent research has shown the usefulness of nighttime light (NTL) data as a proxy for growth and economic activity. This paper explores the potential of using luminosity at night, recorded by satellite imagery, to construct measures of inequality. We develop a new methodology to construct a Gini index for each country using the nighttime light per capita over millions of small pixels. To assess the usefulness of our procedure, we check the correlation of our measure with the common factor extracted from the analysis of several Gini indices calculated using traditional data sources. Finally, we show two specific applications of our methodology: the calculation of within and between inequality across regions and ethnic groups.
    Keywords: Inequality, inequality between and within decomposition, nighttime light, development
    JEL: O10
    Date: 2021–05
  14. By: Stephen L. Ross; Yuan Wang
    Abstract: We define high cost lenders as lenders that issue a disproportionate number of high cost loans. We develop a shift-share measure to capture the market representation of these high cost lenders in housing submarkets. After conditioning on housing submarket fixed effects, origination year fixed effects and trends over origination years based on housing submarket attributes, the magnitude of the estimated relationship is very stable as detailed controls for borrower attributes, credit score and loan terms are added. The relationship between the representation of high cost lenders and foreclosure is broad based across borrowers and types of loans, but is strongest for loans originated by high cost lenders whether or not the loans themselves are high cost. We investigate three potential mechanisms: reverse causality where high cost lenders respond to an increase in demand from higher risk borrowers, the types of mortgages issued when high cost lenders increase their market presence, and the behavior of loan servicers when a cohort of loans contains a large number of loans issued by high cost lenders. While we do not have direct information on loan servicers, our evidence points towards foreclosure decisions during the crisis as the primary mechanism behind our findings.
    JEL: D14 G01 G21 R21 R23
    Date: 2021–05
  15. By: Boris, Hirsch; Jahn, Elke J.; Manning, Alan; Oberfichtner, Michael
    Abstract: Using administrative data for West Germany, this paper investigates whether part of the urban wage premium stems from greater competition in denser labor markets. We show that employers possess less wage-setting power in denser markets. We further document that an important part of the observed urban wage premia can be explained by greater competition in denser labor markets.
    JEL: R23 J42 J31
    Date: 2020–11–10
  16. By: Scott W. Hegerty
    Abstract: Milwaukee's 53206 ZIP code, located on the city's near North Side, has drawn considerable attention for its poverty and incarceration rates, as well as for its large proportion of vacant properties. As a result, it has benefited from targeted policies at the city level. Keeping in mind that ZIP codes are often not the most effective unit of geographic analysis, this study investigates Milwaukee's socioeconomic conditions at the block group level. These smaller areas' statistics are then compared with those of their corresponding ZIP codes. The 53206 ZIP code is compared against others in Milwaukee for eight socioeconomic variables and is found to be near the extreme end of most rankings. This ZIP code would also be among Chicago's most extreme areas, but would lie near the middle of the rankings if located in Detroit. Parts of other ZIP codes, which are often adjacent, are statistically similar to 53206, however--suggesting that a focus solely on ZIP codes, while a convenient shorthand, might overlook neighborhoods that have similar need for investment. A multivariate index created for this study performs similarly to a standard multivariate index of economic deprivation if spatial correlation is taken into account, confirming that poverty and other socioeconomic stresses are clustered, both in the 53206 ZIP code and across Milwaukee.
    Date: 2021–05
  17. By: Mauricio Talassino (Universidad de San Andrés/UNSTA/CONICET); Marcos Herrera Gómez (Universidad Nacional de Salta/CONICET)
    Abstract: Este trabajo analiza diferentes modelos de convergencia para la Argentina usando herramientas de econometría espacial. El análisis espacial permite descomponer los resultados entre efectos directos, netos de dependencia espacial, y efectos indirectos, generados por el contagio entre regiones. Nuestra investigación detecta que la falta de convergencia en los resultados es producto del contagio espacial, anulando el efecto de convergencia neta. Este resultado brinda indicios sobre las causas de la no- convergencia detectada en investigaciones similares, destacando la importancia de las interacciones espaciales en los modelos de convergencia y en el diseño de políticas económicas regionales, más allá de las diseñadas a nivel local y/o provincial. La investigación incluye un análisis del proceso de difusión espacial ante shocks regionales para todo el país.
    Keywords: Convergencia regional Efectos espaciales Argentina
    JEL: C21 R11
    Date: 2021–03
  18. By: Ana Laura Chara; Jimena Vicentin Masaro
    Abstract: La decisión de producción de trigo por parte del productor agrícola en Argentina se rige por variables tanto políticas como económicas y climáticas. Recientemente, se ha comenzado a analizar la posible influencia ejercida a través de la vecindad en la toma de decisión de producción. Mediante técnicas de econometría espacial, el presente trabajo estudia la producción departamental de trigo durante los años 2010 y 2016 en la Región Pampeana argentina. Persiguiendo el objetivo final de predicción, se modelan las series productivas mediante modelos econométricos agregando correlaciones relativas a la cercanía y a la ubicación geográfica. Habiéndose detectada la correlación espacial entre las unidades analizadas, no incluir tal efecto en el modelado de las series, podría derivar en errores de cálculo a la hora de distinguir entre los factores intervinientes en el proceso de decisión de producción. Esta información resulta relevante al analizar y diseñar políticas de desarrollo del sector, debido a los efectos económicos de carácter regional, así como también, de la estructura productiva del país, teniendo en cuenta las características de los procesos decisorios de los agentes.
    Keywords: Trigo, Econometría Espacial, Decisiones de Producción, Área Sembrada
    JEL: D24 R12 Q12 Q18
    Date: 2020–11

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