nep-geo New Economics Papers
on Economic Geography
Issue of 2022‒01‒10
ten papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Regional convergence at the county level: The role of commuters By Melanie Krause; Sebastian Kripfganz
  2. The geography of environmental innovation: A critical review and agenda for future research By Losacker, Sebastian; Hansmeier, Hendrik; Horbach, Jens; Liefner, Ingo
  3. The Impact of the Spatial Population Distribution on Economic Growth By Burgi, Constantin; Gorgulu, Nisan
  4. Transitions as a coevolutionary process: the urban emergence of electric vehicle inventions By Andrea Ferloni
  5. Enhancing regional convergence in the European Union By Álvaro Pina; Patrizio Sicari
  6. Matching and sorting across regions By Lacava, Chiara
  7. Agglomeration in manufacturing and services: an experimental application of a distance-based measure to Sardinia By A. Tidu; S. Usai; F. Guy
  8. Entrepreneurial Ecosystems and Regional Persistence of High Growth Firms: A 'Broken Clock' Critique By Coad, Alex; Srhoj, Stjepan
  9. Where is Standard of Living the Highest? Local Prices and the Geography of Consumption By Rebecca Diamond; Enrico Moretti
  10. New Area- and Population-based Geographic Crosswalks for U.S. Counties and Congressional Districts, 1790-2020 By Ferrara, Andreas; Testa, Patrick A.; Zhou, Liyang

  1. By: Melanie Krause (Department of Economics, University of Hamburg); Sebastian Kripfganz (Department of Economics, University of Exeter)
    Abstract: The growth trajectory of a region is known to be influenced by the economic circumstances of other regions in its proximity. While proximity is often understood in a geographic sense, we consider commuting as a channel for cross-regional economic dependencies. Commuters, who spend a substantial portion of their income in a different place from where they earn it, connect peripheral regions to economic centers. In contrast to geographic measures, commuter flows are inherently asymmetric and heterogeneous, as are the economic dependencies among regions. We estimate a time-space dynamic panel model with German county-level data, and demonstrate a considerable variation in the distribution of shock responses which is hidden by the traditional focus on average marginal effects. In counterfactual experiments, the local spatial multipliers differ substantially depending on the nature of the shock or policy intervention and the assumed network structure, with implications for the growth convergence process.
    Keywords: regional convergence, commuting, spatial weight matrix, shock propagation, time-space dynamic panel data model
    JEL: R12 C23 J61 O18
    Date: 2022–01–05
  2. By: Losacker, Sebastian (University Hannover); Hansmeier, Hendrik (Fraunhofer Institute for Systems and Innovation Research ISI); Horbach, Jens (University of Applied Sciences Augsburg); Liefner, Ingo (University Hannover)
    Abstract: Environmental innovations make an important contribution to solving ecological and climate crises. Although these crises are global phenomena, the regional dimension plays a crucial role, as regions both provide the conditions for the development of environmental innovations and promote widespread use and diffusion. Against this background, this article has two objectives. Firstly, we critically review the state of research on regional determinants of environmental innovation. Secondly, based on these results, we develop an agenda for further research in regional studies that will help to better understand the geography of environmental innovation and to come up with useful region-specific policy recommendations.
    Keywords: environmental innovation; geography of innovation; sustainability transitions; regional development; geography of transitions
    JEL: O31 O33 Q55 R11
    Date: 2021–12–17
  3. By: Burgi, Constantin (University College Dublin, School of Economics); Gorgulu, Nisan (Department of Economics, Copenhagen Business School)
    Abstract: We look at the spatial angle of economic growth. Specifically, we assess whether areas where people live closer together experience faster growth. Traditional measures like population density or urbanization are not optimal, as they are affected by large uninhabited areas or capped, respectively. We thus introduce a new measure Spatial Population Concentration (SPC) that captures how many people live on average within a given radius of every person within a geographic area. This measure allows for a more accurate measurement of the population concentration than traditional measures, as it does not share some of their short comings. Next, we show for U.S. counties that areas with a high spatial population concentration experience faster growth. We find that counties with a low value of SPC measure in 1990 experienced substantially lower GDP growth over the next 25 years.
    Keywords: spatial population concentration; endogeneous growth; spillover; the United States
    JEL: O47 O51 R12
    Date: 2021–11–19
  4. By: Andrea Ferloni (Institute of Geography and Sustainability (IGD), University of Lausanne- UNIL)
    Abstract: The transition to Electric Vehicles (EVs) is a coevolutionary process involving at least three sectors—EV, battery, and smart grid—in replacing combustion cars. This paper contributes to research on the geography of transitions by linking increased relatedness between technologies over time with their co-location, exploring the spatial emergence of transition industries and the role of local economic systems in enabling it. Patent citations are used to construct three main paths from 1920 to 2020 that permit to geolocate key inventions and to elaborate on the role of cities in supporting knowledge exchanges and recombinations. The case study suggests that a coevolutionary perspective can contribute to understanding the geography of transitions in three ways: by showing how new technology configurations imply varying power relations between industrial fields, by elaborating on the capacity of urban regions to adapt to these, and by illustrating the role of actors and networks in this process.
    Keywords: Coevolution, Electric Vehicle, Geography of transitions, Large Urban Regions, Patent networks, Main path analysis
    Date: 2021
  5. By: Álvaro Pina; Patrizio Sicari
    Abstract: Progress in regional convergence in the EU has been uneven over the last two decades. While Central and Eastern Europe has been catching up, Southern Europe has often lost ground, especially after the global financial crisis. Furthermore, within most countries, gaps between large cities and rural areas have widened. Some challenges to convergence have stemmed from worldwide factors – such as globalisation, digitalisation, global warming, and, more recently, COVID19 – but others are European-specific, like incomplete financial integration, less effective fiscal governance and subpar innovation performance.This paper proposes policy action to reduce regional divergence by helping regions upgrade their productive specialisation. Building on new approaches to regional and industrial policies, Europe needs to exploit the full potential of cross-country cooperation in innovation and of urban agglomeration economies. Competition and trade policies need to ensure a level playing field to enhance the benefits of open and competitive markets while responding to new challenges, such as digitalisation or foreign subsidies. Finally, Cohesion Policy and the Common Agricultural Policy, the two largest EU budget instruments, need to become more effective at promoting productive upgrading.
    Keywords: Common Agricultural Policy, competition policy, EU cohesion policy, innovation policy, regional specialisation, territorial inequalities
    JEL: L40 O38 R11 R58
    Date: 2021–12–17
  6. By: Lacava, Chiara
    Abstract: I measure the effects of workers' mobility across regions of different productivity through the lens of a search and matching model with heterogeneous workers and firms estimated with administrative data. In an application to Italy, I find that reallocation of workers to the most productive region boosts productivity at the country level but amplifies differentials across regions. Employment rates decline as migrants foster job competition, and inequality between workers doubles in less productive areas since displacement is particularly severe for low-skill workers. Migration does affect mismatch: mobility favors co-location of agents with similar productivity but within-region rank correlation declines in the most productive region. I show that worker-firm complementarities in production account for 33% of the productivity gains. Place-based programs directed to firms, like incentives for hiring unemployed or creating high productivity jobs, raise employment rates and reduce the gaps in productivity across regions. In contrast, subsidies to attract high-skill workers in the South have limited effects.
    Keywords: cross-regional mobility,mismatch,search-matching,sorting,productivity differentials
    JEL: J61 J64 R13
    Date: 2021
  7. By: A. Tidu; S. Usai; F. Guy
    Abstract: This paper aims to assess the extent of agglomeration processes across industries and along time within a regional economic system by means of a distance-based measure. Specifically, we compute Marcon & Puech's (2017) M for every industry in Sardinia in 2007 and 2012. This computation allows us to to assess the underlying patterns of agglomeration or dispersion throughout the Great Recession, through a study that is not limited to manufacturing activities but also covers service industries and other sectors. At the same time, this is the first tentative operationalization of M for an entire region, thanks to an approximation of plant addresses with the centroids of the municipalities where they are located. Such an approximation is aimed to reduce the computational intensity that has prevented M from being actually used for the study of the entire economic activity of areas larger than individual neighborhoods or cities. Preliminary evidence seems encouraging and suggests future developments in this direction.
    Keywords: sardinia;agglomeration;spatial methods;economic geography;distance-based measures
    Date: 2021
  8. By: Coad, Alex; Srhoj, Stjepan
    Abstract: The Entrepreneurial Ecosystems (EE) approach makes specific predictions regarding how EE inputs are converted into high-growth firms (HGFs) as an output. A simulation model draws out our hypothesis of regional persistence in HGF shares. Based on intuitions that EEs are persistent, we investigate whether regional HGF shares are persistent, using census data for 2 European countries taken separately (Croatia for 2004-2019, and Slovenia for 2008-2014). Overall, there is no clear persistence in regional HGF shares - regions with large HGF shares in one period are not necessarily likely to have large HGF shares in the following period. This is a puzzle for EE theory. In fact, there seems to be more persistence in industry-level HGF shares than for regional HGF shares. We formulate a ‘broken clock’ critique - just as a broken clock is correct twice a day, EE recommendations may sometimes be correct, but are fundamentally flawed as long as time-changing outcomes (HGF shares) are predicted using time-invariant variables (such as local universities, institutions and infrastructure).
    Keywords: High-Growth Firms, Persistence, Regional Persistence; Entrepreneurial Ecosystems; Clusters; Sectoral Systems of Innovation
    JEL: L52 L78 M21 O38
    Date: 2021–12–07
  9. By: Rebecca Diamond; Enrico Moretti
    Abstract: Income differences across US cities are well documented, but little is known about the level of standard of living in each city—defined as the amount of market-based consumption that residents are able to afford. In this paper we provide estimates of the standard of living by commuting zone for households in a given income or education group, and we study how they relate to local cost of living. Using a novel dataset, we observe debit and credit card transactions, check and ACH payments, and cash withdrawals of 5% of US households in 2014 and use it to measure mean consumption expenditures by commuting zone and income group. To measure local prices, we build income-specific consumer price indices by commuting zone. We uncover vast geographical differences in material standard of living for a given income level. Low-income residents in the most affordable commuting zone enjoy a level of consumption that is 74% higher than that of low-income residents in the most expensive commuting zone. We then endogenize income and estimate the standard of living that low-skill and high-skill households can expect in each US commuting zone, accounting for geographical variation in both costs of living and expected income. We find that for college graduates, there is essentially no relationship between consumption and cost of living, suggesting that college graduates living in cities with high costs of living—including the most expensive coastal cities—enjoy a standard of living on average similar to college graduates with the same observable characteristics living in cities with low cost of living—including the least expensive Rust Belt cities. By contrast, we find a significant negative relationship between consumption and cost of living for high school graduates and high school drop-outs, indicating that expensive cities offer a lower standard of living than more affordable cities. The differences are quantitatively large: High school drop-outs moving from the most to the least affordable commuting zone would experience a 26.9% decline in consumption.
    JEL: F1 J00 R00
    Date: 2021–12
  10. By: Ferrara, Andreas (University of Pittsburgh); Testa, Patrick A. (Tulane University); Zhou, Liyang (University of Pittsburgh)
    Abstract: A common problem in applied research involves harmonizing geographic units across time or different levels of aggregation. One approach is to use “crosswalks†that associate factors located within some “origin†unit to different “reference†units based on relative areas. We develop an alternative approach based on relative population, accounting for heterogeneities in urbanization within counties. We construct population-based crosswalks for 1790 through 2020, mapping county-level data across U.S. Censuses as well as from counties to congressional districts. Using official Census data for congressional districts, we show that population-based weights outperform area-based ones in terms of similarity to official data
    Keywords: boundary harmonization; geographic crosswalks; spatial population distribution JEL Classification: R12, C18, C59
    Date: 2021

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