nep-geo New Economics Papers
on Economic Geography
Issue of 2022‒04‒25
sixteen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Consumption access and agglomeration: evidence from smartphone data By Redding, Stephen; Nakajima, Kentaro; Miyauchi, Yuhei
  2. Place-Based Policies and Agglomeration Economies: Firm-Level Evidence from Special Economic Zones in India By Görg, Holger; Mulyukova, Alina
  3. Technology network structure conditions the economic resilience of regions By Gergõ Tóth; Zoltán Elekes; Adam Whittle; Changjun Lee; Dieter F. Kogler
  4. Two-dimensional Geographical Position as a Factor in Determining the Growth and Decline of Retail Agglomeration By Aizawa, Hiroki; Kono, Tatsuhito
  5. The Railway Gauge Muddle in Australia By Nicholas Sheard
  6. The impact of spatial clustering of occupation on commuting time and employment status By Tamás Bakó; Judit Kálmán
  7. Quarterly GDP Estimates for the German States By Lehmann, Robert; Wikman, Ida
  8. Is the European Union More Unequal Than the Habsburg Empire? Examining Regional Inequalities in Habsburg Regions From 1870 to 2018 By Erfurth, Philipp Emanuel
  9. The Long-Run Effects of Immigration: Evidence Across a Barrier to Refugee Settlement By Antonio Ciccone; Jan Nimczik
  10. Economic Geography and the Efficiency of Environmental Regulation By Alex Hollingsworth; Taylor Jaworski; Carl Kitchens; Ivan J. Rudik
  11. Estimating General Equilibrium Spillovers of Large-Scale Shocks By Kilian Huber
  12. Health Interventions in a Poor Region and Resilience in the Presence of a Pandemic By Batabyal, Amitrajeet; Beladi, Hamid
  13. Tax Policy and Interregional Competition for Mobile Venture Capital by the Creative Class By Batabyal, Amitrajeet; Yoo, Seung Jick; Batabyal, Amit
  14. Return to skills and urban size: Evidence from the skill requirements of Hungarian firms By László Czaller; Zoltán Hermann
  15. The efficiency of basic economic branches in Greek regions: Evidence from Data Envelopment Analysis. By Gkouzos, Andreas
  16. Solving the longitude puzzle: A story of clocks, ships and cities By Miotto, M; Pascali, L

  1. By: Redding, Stephen; Nakajima, Kentaro; Miyauchi, Yuhei
    Abstract: We provide new theory and evidence on the role of consumption access in understanding the agglomeration of economic activity. We combine smartphone data that records user location every 5 minutes of the day with economic census data on the location of service-sector establishments to measure commuting and noncommuting trips within the Greater Tokyo metropolitan area. We show that non-commuting trips are frequent, more localized than commuting trips, strongly related to the availability of nontraded services, and occur along trip chains. Guided by these empirical findings, we develop a quantitative urban model that incorporates travel to work and travel to consume non-traded services. Using the structure of the model, we estimate theoretically-consistent measures of travel access, and show that consumption access makes a sizable contribution relative to workplace access in explaining the observed variation in residents and land prices across locations. Undertaking counterfactuals for changes in travel costs, we show that abstracting from consumption trips leads to a substantial underestimate of the welfare gains from a transport improvement (because of the undercounting of trips) and leads to a distorted picture of changes in travel patterns within the city (because of the different geography of commuting and non-commuting trips).
    Keywords: agglomeration; urbanization; transportation
    JEL: O18 R12 R40
    Date: 2021–02–18
  2. By: Görg, Holger (Kiel Institute for the World Economy); Mulyukova, Alina (Kiel Institute for the World Economy)
    Abstract: This paper exploits time and geographic variation in the adoption of Special Economic Zones in India to assess the direct and spillover effects of the program. We combine geocoded firm-level data and geocoded SEZs using a concentric ring approach, thus creating a novel dataset of firms with their assigned SEZ status. To overcome the selection bias we employ inverse probability weighting with time-varying covariates in a difference-in-differences frame-work. Our analysis yields that conditional on controlling for initial selection, SEZs induced no further productivity gains for within SEZ firms, on average. This is predominantly driven by relatively less productive firms, whereas more productive firms experienced significant productivity gains. However, SEZs created negative externalities for firms in the vicinity which attenuate with distance. Neighbouring domestic firms, large firms, manufacturing firms and non-importer firms are the main losers of the program. Evidence points at the diversion of inputs from non-SEZ to SEZ-firms as a potential mechanism.
    Keywords: firm performance, agglomerations, Special Economic Zones, India
    JEL: O18 O25 P25 R10 R58 R23 F21 F60
    Date: 2022–03
  3. By: Gergõ Tóth (Agglomeration and Social Networks Lendület Research Group, Centre for Economic and Regional Studies, Tóth Kálmán u. 4, 1097 Budapest, Hungary and Spatial Dynamics Lab, University College Dublin, D04 V1W8, Dublin, Ireland); Zoltán Elekes (Agglomeration and Social Networks Lendület Research Group, Centre for Economic and Regional Studies, Tóth Kálmán u. 4, 1097 Budapest, Hungary and Centre for Regional Science at Umea University, Umea University, 901 87 Umea, Sweden); Adam Whittle (Spatial Dynamics Lab, University College Dublin, D04 V1W8, Dublin, Ireland); Changjun Lee (Spatial Dynamics Lab, University College Dublin, D04 V1W8, Dublin, Ireland andDepartment of Media and Social Informatics, Hanyang University, Ansan-si, South Korea); Dieter F. Kogler (Spatial Dynamics Lab, University College Dublin, D04 V1W8, Dublin, Ireland Insight Centre for Data Analytics, University College Dublin, Belfield, Dublin 4, Ireland)
    Abstract: This paper assesses the network robustness of the technological capability base of 269 European metropolitan areas against the potential elimination of some of their capabilities. By doing so it provides systematic evidence on how network robustness conditioned the economic resilience of these regions in the context of the 2008 economic crisis. The analysis concerns calls in the relevant literature for more in-depth analysis on the link between regional economic network structures and the resilience of regions to economic shocks. By adopting a network science approach that is novel to economic geographic inquiry, the objective is to stress-test the technological resilience of regions by utilizing information on the co-classification of CPC classes listed on European Patent Office patent documents. We find that European metropolitan areas show heterogeneous levels of technology network robustness. Further findings from regression analysis indicate that metropolitan regions with a more robust technological knowledge network structure exhibit higher levels of resilience with respect to changes in employment rates. This finding is robust to various random and targeted elimination strategies concerning the most frequently combined technological capabilities. Regions with high levels of employment in industry but with vulnerable technological capability base are particularly challenged by this aspect of regional economic resilience.
    Keywords: regional economic resilience, network robustness, metropolitan regions, technology space
    JEL: C53 O30 R11
    Date: 2022–01
  4. By: Aizawa, Hiroki; Kono, Tatsuhito
    Abstract: We investigate where retail stores agglomerate in a road network with radial roads and a ring road in a two-dimensional space. Per-distance travel cost on the radial roads can be different from that on the ring road. The transition of the two-dimensional agglomeration patterns of retail stores is investigated with decreases in the travel costs. Results show 1) a difference in improvement sequences in the radial and ring roads generates a difference in the agglomeration patterns with different welfare levels and 2) how the two-dimensional geographical position of shopping agglomerations ensuring the highest welfare level differs from that in equilibrium.
    Keywords: Agglomeration, Bifurcation, Monopolistic competition, Two-dimensional road network
    JEL: L1 R1 R4
    Date: 2022–03–07
  5. By: Nicholas Sheard
    Abstract: The mainline railways in Australia were initially built in three different gauges, with 'breaks-of-gauge' where passengers and goods transferred between them. This paper studies how the gauge situation affected regional development and the railway network in the 20th century. Regional breaks-of-gauge caused substantial local growth, with population and employment levels increasing by around 50% within a decade relative to otherwise similar places. However, these effects were unwound within two decades of the break-of-gauge being closed. There is little evidence for the gauge-segmented railway network causing different paces of regional development. The gauge muddle also appears to have led to a more limited railway network than if a uniform gauge had been used from the beginning.
    Keywords: Agglomeration, Rail transport, Railway gauge, Trade frictions, Transport infrastructure
    JEL: H54 L92 N77 N97 R42
    Date: 2022–04
  6. By: Tamás Bakó (Institute of Economics, Centre for Economic and Regional Studies,Budapest, Hungary andBudapest Metropolitan University, Hungary); Judit Kálmán (Institute of Economics, Centre for Economic and Regional Studies,Budapest, Hungary andCorvinus University Budapest, Hungary)
    Abstract: In this study we reveal the impact of spatial clustering of occupations on the probability of employment and commuting time, with particular emphasis on differences between genders and household types. Based on Hungarian 2011 census data our research confirmed previous results of some USA studies according to which women work in less spatially clustered occupations compared to men. Our most important result is that more clustered the occupation, the longer the commuting time, and the lower the probability of employment. The effect of occupational clustering on commuting time is larger for women regardless of household type and for those living in a relationship compared to singles. Our further result is that the greater the occupational diversity of the place of residence, the shorter the commuting time and higher the probability of employment, and the occupational diversity of the place of residence modifies the effect of occupational clustering on commuting time.
    Keywords: Commuting time, occupations, employment probabilities
    JEL: R12 J22
    Date: 2022–03
  7. By: Lehmann, Robert; Wikman, Ida
    Abstract: To date, only annual information on economic activity is published for the 16 German states. In this paper, we calculate quarterly regional GDP estimates for the period between 1995 to 2020, thereby improving the regional datbase in Germany. The new data set will regularly be updated when quarterly economic growth for Germany becomes available. We use the new data for an in-depth business cycle analysis and find large heterogeneities in the duration and amplitudes of state-specific business cycles as well as in the degrees of cyclical concordance.
    Keywords: Regional economic activity; mixed-frequency vectorautoregression; regional business cycles; concordance; Bayesian methods
    JEL: C32 C53 E32 R11
    Date: 2022–03–30
  8. By: Erfurth, Philipp Emanuel
    Abstract: This study examines regional inequality among Habsburg regions from the 19th century to today's EU by using Geographic Information Systems (GIS) software to recreate historical regions in present-day projections. The findings suggests that regional disparities are markedly higher today than in the 19th century, despite rapid convergence in the past two decades. The study thus provides evidence of retrospective determinism in the study of the Habsburg economy and suggests that, although regional EU policy has been successful over the past two decades, further policy measures are needed to make up lost ground. For the 1867–1913 timeframe, the study finds two regional convergence clubs. Over the entire 1870–2018 period under review, the study finds no evidence of convergence. (Stone Center on Socio-Economic Inequality Working Paper)
    Date: 2022–03–31
  9. By: Antonio Ciccone; Jan Nimczik
    Abstract: After the end of World War II in 1945, millions of refugees arrived in what in 1949 became the Federal Republic of Germany. We examine their e ect on today's productivity, wages, income, rents, education, and population density at the municipality level. Our identification strategy is based on a spatial discontinuity in refugee settlement at the border between the French and US occupation zones in the South-West of post-war Germany. These occupation zones were established in 1945 and dissolved in 1949. The spatial discontinuity arose because the US zone admitted refugees during the 1945-1949 occupation period whereas the French zone restricted access. By 1950, refugee settlement had raised population density on the former US side of the 1945-1949 border significantly above density on the former French side. Before the war, there never had been significant di erences in population density. The higher density on the former US side persists entirely in 2020 and coincides with higher rents as well as higher productivity, wages, and education levels. We examine whether today's economic di erences across the former border are the result of the di erence in refugee admission; the legacy of other policy di erences between the 1945-1949 occupation zones; or the consequence of socio-economic di erences predating WWII. Taken together, our results indicate that today's economic di erences are the result of agglomeration e ects triggered by the arrival of refugees in the former US zone. We estimate that exposure to the arrival of refugees raised income per capita by around 13% and hourly wages by around 10%.
    Keywords: immigration, productivity wages, refugess, long-run effects
    JEL: O4 O11 R11
    Date: 2022–04
  10. By: Alex Hollingsworth; Taylor Jaworski; Carl Kitchens; Ivan J. Rudik
    Abstract: We develop a spatial equilibrium model to evaluate the efficiency and distributional impacts of the leading air quality regulation in the United States: the National Ambient Air Quality Standards (NAAQS). We link our economic model to an integrated assessment model for air pollutants which allows us to capture endogenous changes in emissions, amenities, labor, and production. Our results show that the NAAQS generate over $23 billion of annual welfare gains. This is roughly 80 percent of welfare gains of the second-best NAAQS design, but only 25 percent of the first-best emission pricing policy. The NAAQS benefits are concentrated in a small set of cities, impose substantial costs on manufacturing workers, improve amenities in counties in compliance with the NAAQS, and reduce emissions in compliance counties through general equilibrium channels. These findings highlight the importance of accounting for geographic reallocation and equilibrium responses when quantifying the effects of environmental regulation.
    JEL: F18 Q52 Q53
    Date: 2022–03
  11. By: Kilian Huber
    Abstract: Large-scale financial and macroeconomic shocks directly affect some firms and households and indirectly impact others through general equilibrium spillovers. In this paper, I describe how researchers can estimate spillovers directly using quasi-experimental or experimental variation. I then argue that spillover estimates suffer from distinct sources of mechanical bias that standard empirical tools cannot resolve. These biases are particularly relevant in finance and macroeconomics where multiple spillover channels and nonlinear effects are common. I offer guidance on how to detect and overcome mechanical biases. An application to a credit shock and additional examples highlight the broad relevance of the suggested methods.
    JEL: C13 C2 D5 E0 E51 G0 G21 G30 L2 R11 R23 R51
    Date: 2022–04
  12. By: Batabyal, Amitrajeet; Beladi, Hamid
    Abstract: We focus on a poor region and study the nexuses between health interventions undertaken by a regional authority (RA) and this region’s Holling resilience in the presence of a pandemic such as Covid-19. First, we show how a health intervention by the RA probabilistically affects an appropriately defined health indicator. Second, we compute the chance that the health status of this region’s population falls below a minimum acceptable level in the presence of the health intervention. Third, we solve an optimization problem in which the RA maximizes the likelihood that the health status of this region’s population stays above a minimum acceptable level at a given economic cost. Our analysis demonstrates that there is a connection between a health intervention, a region’s health status, and its Holling resilience by presenting two applications. Our analysis reveals that this paper’s methodology can be used to compute a region’s Holling resilience with a particular health intervention. The main policy implications of our analysis concern the need for a RA to pay attention to (i) a region’s health infrastructure and financing, (ii) sufficient engagement with the region’s population, (iii) regional heterogeneity, (iv) data collection, and (v) the likelihood that sicker regions are likely to require more health interventions at a higher cost.
    Keywords: Cost, Pandemic, Regional Health Indicator, Resilience, Uncertainty
    JEL: I18 R11
    Date: 2021–01–17
  13. By: Batabyal, Amitrajeet; Yoo, Seung Jick; Batabyal, Amit
    Abstract: We study how tax policy affects the competition for venture capital by the creative class in two regions A and B. The creative class in each region produces a final good with venture capital and creative capital. Venture capital moves freely between the two regions and the representative creative class member in each region has access to an initial amount of venture capital. Each region taxes venture capital at a particular rate and the tax revenue is paid out as a transfer to the representative creative class member. In this setting, we perform five tasks. We begin by determining the first-best tax rates in the two regions. Second, we solve for the net price of venture capital and then express the objective function that is to be maximized in each region as a function of this price. Third, we compute the first-order necessary conditions that describe the optimal tax rates in the two regions and show that the sign of the tax rate depends on the net exporting position of the region. Fourth, for specific parameter values, we calculate the two tax response functions and discuss their properties. Finally, we compute the two equilibrium taxes as a function of the model’s key parameters and show that these taxes must be of opposite signs.
    Keywords: Competition, Creative Class, Region, Tax Policy, Venture Capital
    JEL: H25 R11
    Date: 2021–10–01
  14. By: László Czaller (Agglomeration and Social Networks Lendület Research Group, Budapest, H-1097, Hungary and Institute of Economics, Centre for Economic and Regional Studies, H-1097, Hungary); Zoltán Hermann (Institute of Economics, Centre for Economic and Regional Studies, Budapest, H-1097, Hungary andInstitute of Economics, Corvinus University, Budapest, HU-1093, Hungary)
    Abstract: While most empirical studies document that cognitive and social skills are strong predictors of individual earnings, their impact is not homogenous in space. We argue that dense urban settings utilize cognitive and social skills more intensively than rural areas, therefore the labour market return to these skills is higher in cities. Using data from a representative survey recording the skills requirements of Hungarian firms, we show that social skills are rewarded more in dense urban areas. Surprisingly, this pattern is not observed for cognitive skills. We use instrumental variables strategy to correct for measurement errors in skills, and to deal with the endogeneity of agglomeration. Our results are robust to alternative agglomeration measures and a large set of controls, however, returns to skills vary considerably across worker groups and industries.
    Keywords: agglomeration, cognitive and social skills, wages, urban labour markets
    JEL: J24 J31 R12
    Date: 2022–02
  15. By: Gkouzos, Andreas
    Abstract: An input-oriented BCC model used to estimate the efficiency of basic economic branches in Greek regions at NUTS 2 level. The basic agriculture-forestry and fishery such as basic wholesale and retail trade, public administration and education were completely efficient in the most regions in 2017. On the other hand, the basic energy, transportation-storage and financial services displayed as completely efficient in the lowest number of regions.
    Keywords: economic base theory, basic economic branches, data envelopment analysis, Greek regions
    JEL: R0 R11 R12
    Date: 2022
  16. By: Miotto, M (CERGE-EI and CAGE); Pascali, L (Pompeu Fabra Univerity, Barcelona GSE, CAGE and CEPR)
    Abstract: In the 19th century, the process of European expansion led to unprecedented changes in the urban landscape outside of Europe, with the urban population moving towards the coast and tripling in size. We argue that the majority of these changes can be explained by a single innovation, the chronometer, which allowed European explorers and merchants to measure longitude at sea. We use high-resolution global data on climate, ship routes, and demography from 1750 to 1900 to investigate empirically (i) the role of the adoption of the marine chronometer in re-routing trans-oceanic navigation, and (ii) the impact of these changes on the distribution of cities and population across the globe. Our identification relies on the differential impact of the chronometer across trans-oceanic sailing routes.
    Keywords: Longitude, Chronometer, Gravity, Globalization, Trade, Development JEL Classification: F1, F15, F43, R12, R4
    Date: 2022

This nep-geo issue is ©2022 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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.