nep-geo New Economics Papers
on Economic Geography
Issue of 2021‒07‒26
eleven papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. The early development of new establishments: An evaluation of the role of spatial selection and agglomeration By Javier Changoluisa
  2. On the Road (Again): Commuting and Local Employment Elasticities in Germany By Oliver Krebs; Michael Pflüger
  3. Modelling Clusters From The Ground Up: A Web Data Approach By Stich, Christoph; Tranos, Emmanouil; Nathan, Max
  4. Entrepot: Hubs, Scale, and Trade Costs By Sharat Ganapati; Woan Foong Wong; Oren Ziv
  5. Micro-Geographic Property Price and Rent Indices By Gabriel Ahlfeldt; Stephan Heblich; Tobias Seidel
  6. Looking for a Star: Evaluating the Effect of the Cohesion Policy on Regional Well-Being By Albanese, Giuseppe; Carrieri, Vincenzo; Speziali, Maria Maddalena
  7. Do Creative Industries Generate Multiplier Effects? Evidence from UK Cities, 1997-2018 By Gutierrez-Posada, Diana; Kitsos, Tasos; Nathan, Max; Nuccio, Massimiliano
  8. Social Mobility in Germany By Majed Dodin; Sebastian Findeisen; Lukas Henkel; Dominik Sachs; Paul Schüle
  9. Re-examining the Brazilian South-Northeast labour income gap: A decomposition approach By Rodrigo C. Oliveira; Raul da Mota Silveira Neto
  10. Assessing Smart Specialisation: Policy Implementation Measures By Ugo Fratesi; Carlo Gianelle; Fabrizio Guzzo
  11. Are Rents Excessive in the Central City?: A Geospatial Analysis By Scott W. Hegerty

  1. By: Javier Changoluisa (ESAI Business School, Universidad Espiritu Santo, Guayaquil, Ecuador)
    Abstract: This paper analyzes the early development of new establishments evaluating the role of spatial selection and agglomeration. The analysis shows a clear and strong selection of more productive new establishments into larger regions, regardless of the foundation type. While at the end of the time-period analyzed new establishments located in larger regions still show higher productivity levels as compared to those located in smaller regions, the role of an agglomeration is very distinct depending on the foundation type. Spin-offs in larger regions tend to keep the higher productivity level shown in the first time period, but start-ups suffer negative agglomeration effects over time.
    Keywords: Entrepreneurship, agglomeration, firm selection, productivity
    JEL: L26 L25 R30 R12
    Date: 2021–07–22
  2. By: Oliver Krebs; Michael Pflüger
    Abstract: This paper develops a quantitative spatial general equilibrium model for the German economy to address two issues. First, we explore the role of commuting for local labor markets and their capacity to absorb productivity shocks. Second, we address the role of housing markets for quantitative analyses. Germany is an exciting laboratory because commuting across local labor markets is pervasive, unique data are available, and because Germany’s high degree of trade openness poses a thrilling counterpoint to the United States. Our key findings for German counties are that the employment and resident elasticities associated with local productivity shocks are much above unity, yet disparate (the former larger than the latter), very heterogeneous, and only poorly predicted by simple labor market statistics. Allowing the supply of land/housing to be price elastic increases the elasticities and reinforces our conclusions. The regional heterogeneity of the land/housing shares in Germany turns out to be inessential for our findings, the level of the land/housing share plays an important role, however. We perform a plethora of robustness checks which allow us to gain perspective on extant findings for the United States.
    Keywords: quantitative spatial analysis, commuting, migration, employment and resident elasticities
    JEL: F12 F14 R13 R23
    Date: 2021
  3. By: Stich, Christoph; Tranos, Emmanouil; Nathan, Max (UCL)
    Abstract: This paper proposes a new methodological framework to identify economic clusters over space and time. We employ a unique open source dataset of geolocated and archived business webpages and interrogate them using Natural Language Processing to build bottom-up classi- fications of economic activities. We validate our method on an iconic UK tech cluster – Shoreditch, East London. We benchmark our results against existing case studies and admin- istrative data, replicating the main features of the cluster and providing fresh insights. As well as overcoming limitations in conventional industrial classification, our method addresses some of the spatial and temporal limitations of the clustering literature.
    Date: 2021–05–02
  4. By: Sharat Ganapati; Woan Foong Wong; Oren Ziv
    Abstract: Entrepôts are hubs that facilitate trade between multiple origins and destinations. We study these entrepôts, the network they form, and their impact on international trade. We document that the trade network is a hub-and-spoke system, where 80% of trade is shipped indirectly—nearly all via entrepôts. We estimate indirect-shipping consistent trade costs using a model where shipments can be sent indirectly through an endogenous transport network and develop a geography-based instrument to estimate economies of scale in shipping. Counterfactual infrastructure improvements at entrepôts have on average ten times the global welfare impact of improvements at non-entrepôts.
    JEL: F10 F12 F14
    Date: 2021–07
  5. By: Gabriel Ahlfeldt; Stephan Heblich; Tobias Seidel
    Abstract: We develop a programming algorithm that predicts a balanced-panel mix-adjusted house price index for arbitrary spatial units from repeated cross-sections of geocoded micro data. The algorithm combines parametric and non-parametric estimation techniques to provide a tight local fit where the underlying micro data are abundant and reliable extrapolations where data are sparse. To illustrate the functionality, we generate a panel of German property prices and rents that is unprecedented in its spatial coverage and detail. This novel data set uncovers a battery of stylized facts that motivate further research, e.g. on the density bias of price-to-rent ratios in levels and trends, within and between cities. Our method lends itself to the creation of comparable neighborhood-level qualified rent indices (Mietspiegel) across Germany.
    Keywords: index, real estate, price, property, rent
    JEL: R10
    Date: 2021
  6. By: Albanese, Giuseppe (Bank of Italy); Carrieri, Vincenzo (Magna Graecia University); Speziali, Maria Maddalena (Magna Graecia University)
    Abstract: This paper presents new evidence on the last concluded wave (2007-2013) of the EU cohesion policy. We depart from the broadly used GDP-growth approach and evaluate the impact of EU Structural Funds (SFs) on a battery of regional well-being indicators including economic, educational, health, and demographic outcomes. We exploit the SFs assignment rule to construct a fuzzy RDD. Our results reveal an overall null effect of the policy. We further identify how regional (i) quality of government (ii) human capital and (iii) urbanization impact the policy's effectiveness. We conclude that these characteristics affect the relationship between SFs and economic outcomes only.
    Keywords: regional well-being, cohesion policy, Fuzzy RDD
    JEL: C21 H51 H52 I31 R11
    Date: 2021–06
  7. By: Gutierrez-Posada, Diana; Kitsos, Tasos; Nathan, Max (UCL); Nuccio, Massimiliano
    Abstract: The creative industries have received much attention from economic geographers and others, both for their propensity to co-locate in urban settings and their potential to drive urban economic development. However, evidence on the latter is surprisingly sparse. In this paper we explore the long-term, causal impacts of the creative industries on surrounding urban economies. Adapting Moretti’s local multipliers framework, we build a new 20-year panel of UK cities, using fixed effects and a historic instrument to identify effects on non-creative firms and employment. We find that each creative job generates at least 1.9 non-tradable jobs between 1998 and 2018: this is associated with creative business services employees’ local spending, rather than visitors to urban amenities such as galleries and museums. We do not find the same effects for workplaces, and find no causal evidence for spillovers from creative activity to other tradable sectors, findings consistent with descriptive evidence on the increasing concentration of creative industries in a small number of cities. Given the small numbers of creative jobs in most cities, however, the overall effect size of the creative multiplier is small, and shapes only a small part of non-tradable urban employment change. Overall, our results suggest creative economy-led policies for cities can have positive – albeit partial – local economic impacts.
    Date: 2021–07–11
  8. By: Majed Dodin (University of Mannheim); Sebastian Findeisen (University of Konstanz); Lukas Henkel (European Central Bank); Dominik Sachs (LMU Munich); Paul Schüle (ifo Munich and LMU Munich)
    Abstract: We characterize intergenerational social mobility in Germany using census data on the educational attainment of 526,000 children and their parents’ earnings. Our measure of educational attainment is the A-Level degree, a requirement for access to university and the most important qualification in the German education sys-tem. On average, a 10 percentile increase in the parental income rank is associated with a 5.2 percentage point increase in the probability to obtain an A-Level. This parental income gradient has not changed for the birth cohorts from 1980 to 1996, despite a large-scale policy of expanding upper secondary education in Germany. At the regional level, there exists substantial variation in mobility estimates. Place effects, rather than sorting of households into different regions, seem to account for most of these geographical differences. Mobile regions are, among other as-pects, characterized by high school quality and enhanced possibilities to obtain an A-Level degree on vocational schools.
    Keywords: Intergenerational Mobility, Educational Attainment, Local Labor Markets
    JEL: I24 J62 R23
    Date: 2021–07–10
  9. By: Rodrigo C. Oliveira; Raul da Mota Silveira Neto
    Abstract: The purpose of this article is to provide new evidence about the sources of regional income inequalities in Brazil along the wage distribution, taking into account the regional differentials in purchasing power.
    Keywords: Brazil, Income inequality, Decomposition, Income distribution, Regional characteristics
    Date: 2021
  10. By: Ugo Fratesi (Polytechnic University of Milan); Carlo Gianelle (European Commission - JRC); Fabrizio Guzzo (European Commission - JRC)
    Abstract: The objective of this report is to provide an account of how and to what extent the Smart Specialisation approach to regional innovation policy has been implemented in practice. The analysis explores how policy measures implemented under the Thematic Objective 1 “Strengthening research, technological development and innovation” of national and regional Operational Programmes, co-financed by the European Regional Development Fund, have incorporated key Smart Specialisation principles during the 2014-2020 programming period. We identify three main design principles of Smart Specialisation and translate them into three research hypotheses characterized in ways that can be tested empirically.We find that the Smart Specialisation strategies under scrutiny mostly apply a limited portfolio of traditional, supply-side instruments. All things considered, there is limited evidence of the implementation of a truly selective intervention logic aimed to support in a dedicated way different investment priorities. We observe quite pervasive support to the establishment of a critical mass of individual and collaborative entrepreneurial initiatives in all the Smart Specialisation areas, while support to the formation and strengthening of stakeholder communities is only present in a very few territories. We find positive although not widespread evidence of the introduction of novel elements in the design of some instruments; this points to a tentative break with tradition and path dependency which is in line with the spirit of Smart Specialisation. Policy implications for the future development and evolution of European regional innovation policy are derived.
    Keywords: regional innovation policy, Smart Specialisation, policy instruments, implementation measures
    JEL: O25 O30 R12 R58
    Date: 2021–07
  11. By: Scott W. Hegerty
    Abstract: In many U.S. central cities, property values are relatively low, while rents are closer to those in better-off neighborhoods. This gap can lead to relatively large profits for landlords, and has been referred to as "exploitaton" for renters. While much of this gap might be explained by risk, factors such as income and race might play important roles as well. This study calculates Census tract-level measures of the rent-to-property-value (RPV) ratio for 30 large cities and their surrounding metropolitan areas. After examining the spatial distribution of this ratio and relationships with other socioeconomic variables for Milwaukee and three other cities, Z-scores and quantiles are used to identify "extreme" RPV values nationwide. "Rust Belt" cities such as Detroit, Cleveland, and Milwaukee are shown to have higher median and 95% values than do West Coast cities such as Seattle and San Francisco. A spatial lag regression estimation shows that, controlling for income, property values, and vacancy rates, racial characteristics often have the "opposite" signs from what might be expected and that there is little evidence of purely race-based "exploitation" of renters. A significantly negative coefficient for the percentage of Black residents, for example, might suggest that the RPV ratio is lower in a given tract, all else equal. While this study shows where RPV values are highest within as well as between cities, further investigation might uncover the drivers of these spatial differences more fully.
    Date: 2021–07

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