nep-geo New Economics Papers
on Economic Geography
Issue of 2021‒05‒31
eleven papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Agglomeration Economies and Race Specific Spillovers By Elizabeth Ananat; Shihe Fu; Stephen Ross
  2. Do scientific capabilities in specific domains matter for technological diversification in European regions? By Pierre-Alexandre Balland; Ron Boschma;
  3. Path Formation and Reformation: Studying the Variegated Consequences of Path Creation for Regional Development By Moritz Breul; Carolin Hulke; Linus Kalvelage
  4. Drivers of SME Formation in Indian States: The Empirics By Pradhan, Jaya Prakash; Husain, Tareef
  5. Direct, Spillover and Welfare Effects of Regional Firm Subsidies By Siegloch, Sebastian; Wehrhöfer, Nils; Etzel, Tobias
  6. The changing geography of social mobility in the United States By Connor, Dylan Shane; Storper, Michael
  7. Names, diversity and innovation By Kremer, Anna
  8. Suburbanization in the United States 1970-2010 By Stephen J. Redding
  9. Temperature variability and long-run economic development By Linsenmeier, Manuel
  10. How is COVID Changing the Geography of Entrepreneurship? Evidence from the Startup Cartography Project By Catherine E. Fazio; Jorge Guzman; Yupeng Liu; Scott Stern
  11. Interregional Cooperation and Smart Specialisation: a Lagging Regions Perspective By WOOLFORD Jayne; AMANATIDOU Effie; GERUSSI Elisa; BODEN John Mark

  1. By: Elizabeth Ananat; Shihe Fu; Stephen Ross
    Abstract: Racial social isolation within and across workplaces may reduce firm productivity. We provide descriptive evidence that African-Americans feel socially isolated from Whites. To test whether isolation affects productivity, we estimate models of Total Factor Productivity for manufacturing firms allowing returns to local area concentrations of economic activity and human capital spillovers to vary with the racial and ethnic composition of both the establishment and the local area employment. Higher own-race exposure for establishment workers to workers at surrounding establishments strengthens the relationship between productivity and both employment density and concentrations of college educated workers. Effects for human capital spillovers are largest for firms with more patents and more research and development spending. Looming demographic changes suggest that this drag on productivity may increase over time.
    JEL: J15 J24 L11 R12 R23 R32
    Date: 2021–05
  2. By: Pierre-Alexandre Balland; Ron Boschma;
    Abstract: Do scientific capabilities in regions translate into technological leadership? This is one of the most pressing questions in academic and policy circles. This paper analyzes the matching of scientific and technological capabilities of 285 European regions. We build on patent and publication records to identify regions that lie both at the scientific and technological frontiers (strongholds), that are pure scientific leaders, pure technological leaders, or just followers in 18 domains. Our regional diversification model shows that local scientific capabilities in a domain are a strong predictor of the development of new technologies in that domain in regions. This finding is particularly relevant for the Smart Specialization policy because it implies that the analysis of domain-specific scientific knowledge can be a powerful tool to identify new diversification opportunities in regions.
    Keywords: science-technology link, regional diversification, relatedness, strongholds, scientific capabilities, technological capabilities, Smart Specialization policy
    JEL: B52 O33 R11
    Date: 2021–05
  3. By: Moritz Breul; Carolin Hulke; Linus Kalvelage
    Abstract: The emergence of new regional paths is a key topic in economic geography. While new paths are largely associated with positive regional economic outcomes, little is known about how the formation of a new industry affects other parts of the regional economy. By linking recent conceptual advancements on early path formation and inter-path relationships, this article develops a framework for studying how path creation, as a result of diverse resource formation processes, causes the reformation processes of existing industries. The value of the framework is illustrated in a case study on the tourism path formation process in the Zambezi region (Namibia) and its impacts on the agricultural sector. The findings reveal how the path formation has caused new forms of intra-regional inequalities as well as novel opportunities for the existing agricultural sector depending on the inter-path relationship. Beyond these case-study- specific findings, the results emphasize the importance of a broader perspective that goes beyond a single new path and includes non-participating regional actors in the analysis. Only in this way can we understand how new path creation translates into regional economic development.
    Keywords: path creation, regional development, inter-path relationship, new industries, Namibia
    Date: 2021–05
  4. By: Pradhan, Jaya Prakash; Husain, Tareef
    Abstract: The development of small and medium enterprises (SMEs) sector is a key policy priority as these enterprises play a critical role in the growth and development process of any economy. The present study is motivated to explore the regional dimensions of entry of new SMEs across Indian states and sectors covering an extensive study period 1980─2007. It further expands the literature on formation of firms from the sub-national perspective, empirically uncovering regional factors that significantly determine the formation of new firms. Findings suggest that new SME formation in India is characterized by a concentrated regional pattern during the study period with a few regions accounting for disproportionate share of the number of new SMEs formed. Also, Indian sub-national entities exhibited considerably disparity in the entry rate of new SMEs. Regional factors like local market size, availability of skills, technological specialization of manufacturing sector, land transportation networks, and entrepreneurial culture tend to play positive role in the formation rate of SMEs in Indian states.
    Keywords: SMEs, India, Regions, Entry Rate
    JEL: L11 L26 R11
    Date: 2021–05–10
  5. By: Siegloch, Sebastian (University of Mannheim); Wehrhöfer, Nils (ZEW Mannheim); Etzel, Tobias (Deutsche Bundesbank)
    Abstract: We analyze the effects of a large place-based policy, subsidizing up to 50% of investment costs of manufacturing firms in East Germany after reunification. We show that a 1-percentage-point decrease in the subsidy rate leads to a 1% decrease in manufacturing employment. We document important spillovers for untreated sectors in treated counties, untreated counties connected via trade and local taxes, whereas we do not find spillovers on counties in the same local labor market. We show that the policy is at least as efficient as cash transfers to the unemployed, but is more effective in curbing regional inequality.
    Keywords: place-based policies, employment, spillovers, administrative microdata
    JEL: H24 J21 J23
    Date: 2021–05
  6. By: Connor, Dylan Shane; Storper, Michael
    Abstract: New evidence shows that intergenerational social mobility-the rate at which children born into poverty climb the income ladder-varies considerably across the United States. Is this current geography of opportunity something new or does it reflect a continuation of long-term trends? We answer this question by constructing data on the levels and determinants of social mobility across American regions over the 20th century. We find that the changing geography of opportunity-generating economic activity restructures the landscape of intergenerational mobility, but factors associated with specific regional structures of interpersonal and racial inequality that have "deep roots" generate persistence. This is evident in the sharp decline in social mobility in the Midwest as economic activity has shifted away from it and the consistently low levels of opportunity in the South even as economic activity has shifted toward it. We conclude that the long-term geography of social mobility can be understood through the deep roots and changing economic fortunes of places.
    Keywords: economic history; geography; inequality; intergenerational mobility; race
    JEL: N0
    Date: 2020–12–01
  7. By: Kremer, Anna
    Abstract: Diversity of a country is often measured by the amount and spread of nationalities that live there. But also within a country, regions vary in their traditions and culture. Cultural homogeneity within communities is mixed up by (internal) migration, that, like international migration, increases diversity of a place. In a novel approach I therefore look at diversity in German municipality associations measured by different family names and investigate the effect it has on the number of generated patents. I show that cultural diversity and openness of a place affect its economic performance positively in terms of innovation also when referring to intra-country differences.
    Keywords: cultural diversity,innovation,openness,phonebook,patents,local level,Germany,kulturelle Diversität,Innovation,Offenheit,Telefonbuch,Patente,lokal,Deutschland
    JEL: O31 R12 Z10 J61 O1
    Date: 2021
  8. By: Stephen J. Redding
    Abstract: The second half of the twentieth century saw large-scale suburbanization in the United States, with the median share of residents who work in the same county where they live falling from 87 to 71 percent between 1970 and 2000. We introduce a new methodology for discriminating between the three leading explanations for this suburbanization (workplace attractiveness, residence attractiveness and bilateral commuting frictions). This methodology holds in the class of spatial models that are characterized by a structural gravity equation for commuting. We show that the increased openness of counties to commuting is mainly explained by reductions in bilateral commuting frictions, consistent with the expansion of the interstate highway network and the falling real cost of car ownership. We find that changes in workplace attractiveness and residence attractiveness are more important in explaining the observed shift in employment by workplace and employment by residence towards lower densities over time.
    JEL: R12 R30 R40
    Date: 2021–05
  9. By: Linsenmeier, Manuel
    Abstract: This study estimates causal effects of temperature variability on economic activity. For identification I use a novel research design based on spatial first-differences. Economic activity is proxied by nightlights. I distinguish between day-to-day, seasonal, and interannual variability and find that the type of variability matters. The results suggest an economically large and statistically significant negative effect of day-to-day variability on economic activity at most temperature levels. Regarding seasonal variability, I find a smaller but also negative effect. The estimated effect of interannual variability is positive at low and negative at high temperatures. These effects are robust, they can be identified in urban and rural areas, and they cannot be explained with the spatial distribution of agriculture. The results draw attention to the effect of climate variability, which is projected to change but has so far been mostly overlooked in assessments of the impacts and costs of climate change.
    Keywords: climate; temperature; nightlights; day-to-day variability; seasonal variability; interannual variability
    JEL: Q54 Q56 R11 R12 R14 O13
    Date: 2021–05–01
  10. By: Catherine E. Fazio; Jorge Guzman; Yupeng Liu; Scott Stern
    Abstract: Leveraging data from eight U.S. states from the Startup Cartography Project, this paper provides new insight into the changing nature and geography of entrepreneurship in the wake of the COVID pandemic. Consistent with other data sources, following an initial decline, the overall level of state-level business registrations not only rebounds but increases across all eight states. We focus here on the significant heterogeneity in this dynamic pattern of new firm formation across and within states. Specifically, there are significant differences in the dynamics of new business registrants across neighborhoods in terms of race and socioeconomic status. Areas including a higher proportion of Black residents, and more specifically higher median income Black neighborhoods, are associated with higher growth in startup formation rates between 2019 and 2020. Moreover, these dynamics are reflected in the passage of the major Federal relief packages. Even though legislation such as the CARES Act did not directly support new business formation, the passage and implementation of relief packages was followed by a relative increase in start-up formation rates, particularly in neighborhoods with higher median incomes and a higher proportion of Black residents.
    JEL: L26 R12 R23
    Date: 2021–05
  11. By: WOOLFORD Jayne (European Commission - JRC); AMANATIDOU Effie; GERUSSI Elisa (European Commission - JRC); BODEN John Mark (European Commission - JRC)
    Abstract: This report has been prepared as part of the Lagging Regions project of the JRC, which aims to support the implementation of Smart Specialisation Strategies in selected low-growth and less developed regions in EU member states.In the 2021-2027 programming period, smart specialisation strategies will be required to meet a series of fulfilment criteria around the relevant "enabling condition" of good governance. One such criterion relates to international collaboration, or ‘measures for enhancing cooperation with partners in different countries in areas designated as priority areas for smart specialisation’. Within this context of a new governance framework for a new programming period, the Lagging Regions project aimed to explore the implications for a specific set of regions and develop and disseminate relevant policy lessons. The potential for Lagging Regions to participate in interregional and international cooperation remains under-exploited, and this report determines specific challenges as well as potential benefits and opportunities that are relevant for low-growth and low-income regions to support them in their preparations for the 2021-2027 programming period. An exploration of interregional and international cooperation aims to contribute to a better understanding of its role in strengthening innovation ecosystems and its interaction with Smart Specialisation in the context of Lagging Regions.
    Keywords: Lagging Regions, smart specialisation, interregional
    Date: 2021–05

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