nep-geo New Economics Papers
on Economic Geography
Issue of 2021‒06‒28
twelve papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Costs, incentives, and institutions in bridging evolutionary economic geography and global production networks By Rodríguez-Pose, Andrés
  2. Spatial Wage Differentials and Agglomeration Externalities: Evidence from Indonesian Microdata By Masagus M. Ridhwan
  3. Spatial Economics for Granular Settings By Dingel, Jonathan; Tintelnot, Felix
  4. Institutions and the uneven geography of the first wave of the COVID-19 pandemic By Rodríguez-Pose, Andrés; Burlina, Chiara
  5. Technological breakthroughs in European regions: the role of related and unrelated combinations By Ron Boschma; Ernest Miguélez; Rosina Moreno; Diego B. Ocampo-Corrales
  6. Long-Term Decline of Regions and the Rise of Populism: The Case of Germany By Maria Greve; Michael Fritsch; Michael Wyrwich
  7. Plants in Space By Oberfield, Ezra; Rossi-Hansberg, Esteban; Sarte, Pierre-Daniel; Trachter, Nicholas
  8. Essays on economic geography, migration and transport infrastructure By Florin Cucu
  9. Local Public Goods and the Spatial Distribution of Economic Activity By Arthur Guillouzouic--Le Corff; Emeric Henry; Joan Monras
  10. Connective Financing - Chinese Infrastructure Projects and the Diffusion of Economic Activity in Developing Countries By Bluhm, Richard; Dreher, Axel; Fuchs, Andreas; Parks, Brad; Strange, Austin; Tierney, Michael J.
  11. Medieval Cities Through the Lens of Urban Economic Theories By Jedwab, Remi; Johnson, Noel; Koyama, Mark
  12. Your Uber Is Arriving Now: An Analysis of Platform Location Decisions through an Institutional Lens By MMatthijs B. Punt; Jesse van Kollem; Jarno Hoekman; Koen Frenken

  1. By: Rodríguez-Pose, Andrés
    Abstract: Two of the most influential strands in economic geography and regional studies – evolutionary economic geography and global production networks – have run on parallel tracks with limited cross-fertilization. The Regional Studies Annual Lecture 2020 paper by Henry Yeung proposes building bridges across both strands to improve our understanding of the uneven distribution and evolution of economic activity across the world. He puts forward the concept of strategic coupling as the foundation of such bridges. In this reply I argue that strategic coupling will not suffice, unless the variations in costs and incentives for engaging in networks and the different capacity of cities and regions to assimilate the benefits of innovation diffusion through networks are taken into consideration.
    Keywords: evolutionary economic geography; global production networks; strategic coupling; institutions; Taylor & Francis deal
    JEL: F23 L22 R58
    Date: 2021–06–03
  2. By: Masagus M. Ridhwan
    Abstract: This paper aims to examine sources of labor wage differentials and to investigate human capital externalities across Indonesian districts. Our study attempts to fill the gap in the standard literature, which mainly asserts thekey role of labor market characteristics in explaining the disparities. Based on microdata on individual workers from 2006-2015, we found that not only individual (labor) characteristics play a role in explaining the wage variations, but also regional endowments and agglomeration forces. The latter mainly results from spatial proximity of firms to other firms, from labor market pooling, and from knowledge spillovers. In addition, we also found strong evidence of positive human capital externalities, particularly in agglomerated regions. All in all, these findings may suggest the importance of skills and agglomeration for policymakers in boosting local productivity vis-Ã -visreducing income/wage inequality
    Keywords: Local labor markets; Spatial wage differentials; Panel data analysiS
    JEL: R23 J31 J61
    Date: 2020
  3. By: Dingel, Jonathan; Tintelnot, Felix
    Abstract: We introduce a general-equilibrium model of a "granular" spatial economy populated by a finite number of people. Our quantitative model is designed for application to the growing body of fine spatial data used to study economic outcomes for regions, cities, and neighborhoods. Conventional approaches invoking the law of large numbers are ill-suited for such empirical settings. We evaluate quantitative spatial models' out-of-sample predictions using event studies of large office openings in New York City. Our granular framework improves upon the conventional continuum-of-individuals model, which perfectly fits the pre-event data but produces predictions uncorrelated with the observed changes in commuting flows.
    Keywords: commuting; granularity; Gravity Equation; quantitative spatial economics
    JEL: C25 F16 R1 R13 R23
    Date: 2020–05
  4. 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 6 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; coronavirus; Europe; institutions; pandemic; regions
    JEL: H75 R58
    Date: 2021–05–12
  5. By: Ron Boschma; Ernest Miguélez; Rosina Moreno; Diego B. Ocampo-Corrales
    Abstract: This paper analyzes if the emergence and occurrence of breakthrough technologies in 277 European regions in the period 1981 to 2010 is related to the existing technological portfolio of regions. The study shows that, by far, most combinations breakthrough inventions make are between related technologies: almost no breakthrough patent makes combinations between unrelated combinations only. We also find that breakthrough inventions primarily combine and cite technological classes that are present in the region. Regressions show that the occurrence of breakthrough patents in a technology in a region is positively affected by the local stock of technologies that is related to such technology, but we do not find such an effect for the local stock of unrelated technologies, in contrast to studies that suggest otherwise. However, the region’s ability to enter new breakthrough inventions in a technology relies on the combination of knowledge that is both related and unrelated to such technology.
    Keywords: relatedness, unrelatedness, technological breakthroughs, regional diversification, European regions
    JEL: O18 O31 O33 R11
    Date: 2021
  6. By: Maria Greve (Friedrich Schiller University Jena, Germany and University of Groningen, The Netherlands); Michael Fritsch (Friedrich Schiller University Jena, Germany); Michael Wyrwich (University of Groningen, The Netherlands and Friedrich Schiller University Jena, Germany)
    Abstract: What characterizes regions where right-wing populist parties are relatively successful? A prominent hypothesis proposed in recent literature claims that places that are "left behind" or "do not matter" are a breeding ground for the rise of populism. We re-examine this hypothesis by analyzing the rise of populism in Germany. Our results suggest that the high vote shares of populist parties are not only associated with low regional levels of welfare as such, but also with the long-term decline of a region's relative welfare. Hence, it is not the regions that do "not matter" that are most prone to the rise of populism, but the regions that once mattered, but are in long-term decline. Moreover, we find that regional knowledge represents an important channel through which the historical decline in wealth explains voting behavior in German regions.
    Keywords: Populism, economic development, territorial inequality, economic history
    JEL: R1 R11 D72 N94
    Date: 2021–05–11
  7. By: Oberfield, Ezra; Rossi-Hansberg, Esteban; Sarte, Pierre-Daniel; Trachter, Nicholas
    Abstract: We study the number, size, and location of a firm's plants. The firm's decision balances the benefit of delivering goods and services to customers using multiple plants with the cost of setting up and managing these plants, and the potential for cannibalization that arises as their number increases. Modeling the decisions of heterogeneous firms in an economy with a vast number of widely distinct locations is complex because it involves a large combinatorial problem. Using insights from discrete geometry, we study a tractable limit case of this problem in which these forces operate at a local level. Our analysis delivers clear predictions on sorting across space. Productive firms place more plants in dense locations that exhibit high rents compared with less productive firms, and place fewer plants in markets with low density and low rents. Controlling for the number of plants, productive firms also operate larger plants than those operated by less productive firms in locations where both are present. We present evidence consistent with these and several other predictions using U.S. establishment-level panel data.
    JEL: D24 L25 R3
    Date: 2020–05
  8. By: Florin Cucu (Département d'économie)
    Abstract: Cette thèse étudie les déterminants de la variation spatiale et de la persistance de l'activité économique. Le premier chapitre évalue l'impact du Système d’Autoroutes Inter-États sur la composition des zones métropolitaines aux États-Unis. Les estimations indiquent que chaque autoroute a entraîné une augmentation de 0,6 point de pourcentage de la part des résidents hautement qualifiés d’une ville. En utilisant un modèle spatial quantitatif, le chapitre mesure également les effets sur le bien-être associés à une suppression hypothétique des autoroutes. Les effets sont significatifs pour toutes les catégories de travailleurs. Les pertes sont néanmoins plus importantes pour les travailleurs qualifiés, vu qu’ils sont plus mobiles et paient les coûts de migration plus souvent.Le deuxième chapitre montre une forte persistance du développement en Angleterre et au Pays de Galles au cours des 800 dernières années. En utilisant des données sur l'établissement des marchés médiévaux, l'étude met en évidence une forte corrélation entre l'activité commerciale et la productivité agricole au Moyen Âge. Les régions avec des marchés prospères sont mieux développées aujourd’hui. Les résultats suggèrent que la dépendance au sentier en est l'explication la plus probable. Le troisième chapitre étudie la relation entre les politiques d'asile et les tensions internationales. L'hypothèse est que les pays de l'Union européenne acceptent davantage de réfugiés provenant d'États perçus comme des rivaux. Des données sur les demandes d'asile de 1999 à 2017 le confirment. Cela pourrait expliquer une corrélation négative entre les politiques d’asile et les importations de l'UE.
    Keywords: Infrastructure routière, migration, persistance, réfugiés; Transport infrastructure, migration, persistence, refugees
    Date: 2020–11–26
  9. By: Arthur Guillouzouic--Le Corff; Emeric Henry (Département d'économie); Joan Monras (Universitat Pompeu Fabra (UPF))
    Abstract: Using French data, we provide: a) causal evidence that a drop in local public goods provision decreases private sector activity, and b) evidence consistent with monopsony power of the public sector in local labor markets. We introduce a public sector with these two key characteristics in an otherwise standard spatial equilibrium model, and show that it delivers the main stylized facts established in our data, in particular, that the share of the public sector relative to the private is independent of the productivity of the city. We emphasize the tradeoffs between allowing governments to freely choose local public employment and wages (as in most of the US public sector), versus imposing rules that constrain public sector pay with some indexation to the local cost of living (as in many European countries). We show that wage indexation limits monopsony power – leading to a larger public sector – and is optimal if the indexation is sufficiently strong.
    Keywords: Local public goods; Public service; Market power,; Spatial economics
    JEL: H41 J42 J45 R12
    Date: 2021–06
  10. By: Bluhm, Richard; Dreher, Axel; Fuchs, Andreas; Parks, Brad; Strange, Austin; Tierney, Michael J.
    Abstract: This paper studies the causal effect of transport infrastructure on the spatial concentration of economic activity. Leveraging a new global dataset of geo-located Chinese government-financed projects over the period from 2000 to 2014 together with measures of spatial inequality based on remotely-sensed data, we analyze the effects of transport projects on the spatial distribution of economic activity within and between regions in a large number of developing countries. We find that Chinese-financed transportation projects reduce spatial concentration within but not between regions. In line with land use theory, we document a range of results which are consistent with a relocation of activity from city centers to their immediate periphery. Transport projects decentralize activity particularly strongly in regions that are more urbanized, located closer to the coast, and less developed.
    Keywords: China; Development finance; foreign aid; infrastructure; spatial concentration; transport costs
    JEL: F15 F35 O18 O19 P33 R11 R12
    Date: 2020–05
  11. By: Jedwab, Remi; Johnson, Noel; Koyama, Mark
    Abstract: We draw on theories and empirical findings from urban economics to explore and explain patterns of city growth in the Middle Ages (c. 800-1500 CE). We discuss how agricultural development and physical geography determined the location and size of cities during the medieval period. We also consider the relative importance of economies of scale, agglomeration, and human capital spillovers in medieval cities and discuss how their growth was limited by disamenities and constraints on mobility. We discuss how medieval cities responded to shocks such as the Black Death and describe how institutions became increasingly important in determining their trajectories. Avenues for future research are also laid out.
    Keywords: Agglomeration effects; Asia; City Growth; Europe; Food Surplus Hypothesis; institutions; LaborMobility; Medieval Era; Pandemics; Urbanization
    JEL: N9 N93 N95 R11 R12 R19
    Date: 2020–05
  12. By: MMatthijs B. Punt; Jesse van Kollem; Jarno Hoekman; Koen Frenken
    Abstract: The disruptive impact of platform businesses on local economies has received much attention, but virtually none has been paid to the factors that impact platforms’ decisions about where to locate their activities. The novel, disruptive nature of platforms limits the relevance of traditional theories about location decisions. We argue that local institutional conditions and global legitimacy spillovers affect the choices of platform businesses about where to operate. We analyze the controversial case of ride-hailing platform Uber, an app-based service that matches uncertified chauffeurs with passengers. We find that Uber showed a preference for cities that promote competition and innovation. A spillover analysis shows how Uber leveraged their global pool of customers by choosing cities whose visitors were already familiar with Uber’s service. Our study illuminates the key role played by the brand’s mobile customer base as global carriers of legitimacy for Uber’s controversial innovation.
    Keywords: born global, customer following, institutions, legitimacy, platform economy, trusted community
    Date: 2021–06

This nep-geo issue is ©2021 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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