nep-geo New Economics Papers
on Economic Geography
Issue of 2022‒05‒02
sixteen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. The potential impact of students’ migrations to small cities in peripheral regions By Fonseca, Madalena
  2. Multidimensional Poverty in Morocco: An Exploratory Spatial Approach By Eduardo A Haddad; Inacio F Araujo, Zineb Sijelmassi Idrissi, Chanelle Ihezagire, Youness El Bouazzaoui
  3. Does cohesion policy reduce EU discontent and Euroscepticism? By Rodríguez-Pose, Andrés; Dijkstra, Lewis
  4. Micro-geographic property price and rent indices By Ahlfeldt, Gabriel M.; Heblich, Stephan; Seidel, Tobias
  5. Dynamic spatial general equilibrium By Kleinman, Benny; Liu, Ernest; Redding, Stephen J.
  6. Migration, Agglomeration and Attractiveness of Cities in China By Xubei Luo; Nong Zhu
  7. The diffusion of disruptive technologies By Bloom, Nicholas; Hassan, Tarek Alexander; Kalyani, Aakash; Lerner, Josh; Tahoun, Ahmed
  8. The making of the modern metropolis: evidence from London By Heblich, Stephan; Redding, Stephen; Sturm, Daniel
  9. Economic geography, politics, and the world trade regime By Rickard, Stephanie
  10. Geographies of Socio-Economic Inequality By van Ham, Maarten; Manley, David; Tammaru, Tiit
  11. The Long-Run Effects of Immigration: Evidence across a Barrier to Refugee Settlement By Ciccone, Antonio; Nimczik, Jan Sebastian
  12. Dynamic Spatiotemporal ARCH Models By Philipp Otto; Osman Do\u{g}an; S\"uleyman Ta\c{s}p{\i}nar
  13. The donut effect of Covid-19 on cities By Bloom, Nicholas; Ramani, Arjun
  14. Social Networks and Spatial Mobility: Evidence from Facebook in India By Harshil Sahai; Mike Bailey
  15. Global value chain analysis of the automotive and garment sectors: A study of Germany, Spain, Romania, Indonesia and Mexico for 2000-2014 By BRONDINO Gabriele
  16. Migration and wage inequality: A detailed analysis for German regions over time By Schmid, Ramona

  1. By: Fonseca, Madalena
    Abstract: Each year, there are student migration flows to peripheral regions in Portugal to enter higher education and enroll in small higher education institutions, because they are unable to get into the more prestigious and larger universities in the main cities. Those are small counter flows of the main flows from periphery to larger cities. We argue that these flows of students to the peripheries constitute flows of talent, drivers of innovation and economic growth, a means of enhancing human capital and regional upgrading and can contribute to the institutional change of those remote areas.
    Keywords: Talent Flows; Innovation in the peripheries; Students’ migrations; Geography of Talent
    JEL: O15 O35 R11 R23
    Date: 2022–03–10
  2. By: Eduardo A Haddad; Inacio F Araujo, Zineb Sijelmassi Idrissi, Chanelle Ihezagire, Youness El Bouazzaoui
    Abstract: In spite of the overall decrease in poverty in Morocco in the recent past, the pace of change did not affect regions equally. Poorer provinces faced slower reductions, increasing the relative gap in poverty indicators. In this paper, we explore the results of a multidimensional poverty indicator produced by the High Commission for Planning (HCP), the Moroccan official statistical agency, for the period 2004-2014. The Multidimensional Poverty Index (IPM) allows investigating the spatial aspects of different dimensions of poverty in the country. We find a clear spatial process underlying the distribution of the IPM. Moreover, the analysis undertaken at the province level suggests a persistent poverty hot spot in the northeast part of the country associated with poor infrastructure. Other poverty areas are more heavily associated with low quality of public services, particularly education and health. We provide a typology of geographically targeted sectoral policies, showing that there is no single recipe for all regions, since structural features matter.
    Keywords: Spatial analysis; Multidimensional poverty; Policy targeting; Morocco
    JEL: I30 R11
    Date: 2022–03–24
  3. By: Rodríguez-Pose, Andrés; Dijkstra, Lewis
    Abstract: Some regions in Europe that have been heavily supported by the European Union’s Cohesion Policy have recently opted for parties with a strong Eurosceptic orientation. The results at the ballot box have been put forward as evidence that Cohesion Policy is ineffective for tackling the rising, European-wide wave of discontent. However, the evidence to support this view is scarce and often contradictory. This paper analyses the link between Cohesion Policy and the vote for Eurosceptic parties. It uses the share of votes cast for Eurosceptic parties in more than 63,000 electoral districts in national legislative elections in the EU-28 to assess whether Cohesion Policy investment since the year 2000 has made a difference for the electoral support for parties opposed to European integration. The results indicate that Cohesion Policy investment is linked to a lower anti-EU vote. This result is robust to employing different econometric approaches, to considering the variety of European development funds, to different periods of investment, to different policy domains, to shifts in the unit of analysis and to different levels of opposition by parties to the European project.
    Keywords: anti-system voting; cohesion policy; elections; Europe; Euroscepticism; populism; regions
    JEL: D72 R11 R58
    Date: 2021–02–01
  4. By: Ahlfeldt, Gabriel M.; Heblich, Stephan; Seidel, Tobias
    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 price and rent indices for residential and commercial property.
    Keywords: index; real estate; price; property; rent
    JEL: R10
    Date: 2021–07–20
  5. By: Kleinman, Benny; Liu, Ernest; Redding, Stephen J.
    Abstract: We develop a dynamic spatial general equilibrium model with forward-looking investment and migration decisions. We characterize analytically the transition path of the spatial distribution of economic activity in response to shocks. We apply our framework to the re-allocation of US economic activity from the Rust Belt to the Sun Belt from 1965-2015. We find slow convergence to steady-state, with US states closer to steady-state at the end of our sample period than at its beginning. We find substantial heterogeneity in the effects of local shocks, which depend on capital and labor dynamics, and the spatial and sectoral incidence of these shocks.
    Keywords: spatial dynamics; economic geography; trade; migration
    JEL: F14 F15 F50
    Date: 2021–07–28
  6. By: Xubei Luo (The World Bank - The World Bank - The World Bank); Nong Zhu (INRS - Institut National de la Recherche Scientifique [Québec])
    Abstract: This study aims to identify drivers of spatial migration in the context of regional structural transformation towards clean and connected cities. Using two surveys of floating population covering all cities, conducted by China Family Planning Commission in 2010 and 2014, we examine the effect of city characteristics and local policies on the mobility of migrants. Our analyses show that city size, wage level, sectoral composition, ownership structure of enterprises, and healthcare service provision are important factors that condition migratory inflow; their effect varies across migrants with different characteristics. While most of migrants moved to the regional hubs, migration to cities other than hubs has increased in the 2010s and many medium and small cities have become more attractive.
    Keywords: Migration,Agglomeration,City,Structural Transformation,China
    Date: 2022–03–11
  7. By: Bloom, Nicholas; Hassan, Tarek Alexander; Kalyani, Aakash; Lerner, Josh; Tahoun, Ahmed
    Abstract: We identify novel technologies using textual analysis of patents, job postings, and earnings calls. Our approach enables us to identify and document the diffusion of 29 disruptive technologies across firms and labor markets in the U.S. Five stylized facts emerge from our data. First, the locations where technologies are developed that later disrupt businesses are geographically highly concentrated, even more so than overall patenting. Second, as the technologies mature and the number of new jobs related to them grows, they gradually spread across space. While initial hiring is concentrated in high-skilled jobs, over time the mean skill level in new positions associated with the technologies declines, broadening the types of jobs that adopt a given technology. At the same time, the geographic diffusion of low-skilled positions is significantly faster than higher-skilled ones, so that the locations where initial discoveries were made retain their leading positions among high-paying positions for decades. Finally, these technology hubs are more likely to arise in areas with universities and high skilled labor pools.
    Keywords: disruptive technologies; firms; labor markets
    JEL: R14 J01 J1
    Date: 2021–09–10
  8. By: Heblich, Stephan; Redding, Stephen; Sturm, Daniel
    Abstract: Using newly constructed spatially disaggregated data for London from 1801 to 1921, we show that the invention of the steam railway led to the first large-scale separation of workplace and residence. We show that a class of quantitative urban models is remarkably successful in explaining this reorganization of economic activity. We structurally estimate one of the models in this class and find substantial agglomeration forces in both production and residence. In counterfactuals, we find that removing the whole railway network reduces the population and the value of land and buildings in London by up to 51.5% and 53.3% respectively, and decreases net commuting into the historical center of London by more than 300,000 workers.
    JEL: O18 R12 R40
    Date: 2020–11–01
  9. By: Rickard, Stephanie
    Abstract: AAlthough globalization and the world trade regime have reduced the significance of distance between countries, within countries, geography matters now more than ever. Inside countries’ borders, economic activities, such as production and employment, occur unevenly across space. As a result, international trade impacts parts of a country differently. Some areas benefit from rising trade, while others experience reductions in local wages and employment as a result of increased import competition. Because regions’ experience of globalization varies, public opinion about trade differs across geographic areas within countries. Voters living in regions advantaged by trade are likely to support economic openness, while voters living in regions negatively impacted by trade grow increasingly skeptical of the benefits of globalization. The geographic disparities in public attitudes towards trade often align with salient political cleavages. As a result, debates over trade have become increasingly polarized in many countries, which may threaten states’ continued economic openness and their engagement with, and even support for, the world trade regime.
    Keywords: CUP deal
    JEL: N0
    Date: 2022–01–26
  10. By: van Ham, Maarten (Delft University of Technology); Manley, David (University of Bristol); Tammaru, Tiit (University of Tartu)
    Abstract: Over many decades, academics, policymakers and governments have been concerned with both the presence of inequalities and the impacts these can have on people when concentrated spatially in urban areas. This concern is especially related to the influence of spatial inequalities on individual outcomes in terms of health, education, work and income, and general well-being amongst other outcomes. In this commentary, we provide an overview of the literature on spatial inequalities and on contextual and neighbourhood effects. We address some of the main challenges in modelling contextual effects and provide evidence that no single study can definitively provide the answer to the question whether – and how much – spatial context effects are relevant for understanding individual outcomes. It is only when taken together that the rich body of research on spatial context effects shows convincingly that spatial context effects are relevant. The commentary ends with the presentation of the vicious circle of the segregation model and suggest some ways in which this vicious circle of spatial inequality and segregation can be broken.
    Keywords: spatial inequality, segregation, neighbourhood effects, spatial context effects
    JEL: I30 J60 P46 R23
    Date: 2022–03
  11. By: Ciccone, Antonio (University of Mannheim); Nimczik, Jan Sebastian (European School of Management and Technology (ESMT))
    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 effect 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 differences 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 differences across the former border are the result of the difference in refugee admission; the legacy of other policy differences between the 1945-1949 occupation zones; or the consequence of socio-economic differences predating WWII. Taken together, our results indicate that today's economic differences are the result of agglomeration effects 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, refugees, long-run effects
    JEL: O4 O11 R11
    Date: 2022–03
  12. By: Philipp Otto; Osman Do\u{g}an; S\"uleyman Ta\c{s}p{\i}nar
    Abstract: Geo-referenced data are characterized by an inherent spatial dependence due to the geographical proximity. In this paper, we introduce a dynamic spatiotemporal autoregressive conditional heteroscedasticity (ARCH) process to describe the effects of (i) the log-squared time-lagged outcome variable, i.e., the temporal effect, (ii) the spatial lag of the log-squared outcome variable, i.e., the spatial effect, and (iii) the spatial lag of the log-squared time-lagged outcome variable, i.e., the spatiotemporal effect, on the volatility of an outcome variable. Furthermore, our suggested process allows for the fixed effects over time and space to account for the unobserved heterogeneity. For this dynamic spatiotemporal ARCH model, we derive a generalized method of moments (GMM) estimator based on the linear and quadratic moment conditions of a specific transformation. We show the consistency and asymptotic normality of the GMM estimator, and determine the best set of moment functions. We investigate the finite-sample properties of the proposed GMM estimator in a series of Monte-Carlo simulations with different model specifications and error distributions. Our simulation results show that our suggested GMM estimator has good finite sample properties. In an empirical application, we use monthly log-returns of the average condominium prices of each postcode of Berlin from 1995 to 2015 (190 spatial units, 240 time points) to demonstrate the use of our suggested model. Our estimation results show that the temporal, spatial and spatiotemporal lags of the log-squared returns have statistically significant effects on the volatility of the log-returns.
    Date: 2022–02
  13. By: Bloom, Nicholas; Ramani, Arjun
    Abstract: Using data from the US Postal Service and Zillow, we quantify the effect of Covid-19 on migration patterns and real estate markets within and across US cities. We find two key results. First, within large US cities, households, businesses, and real estate demand have moved from dense central business districts (CBDs) towards lower density suburban zip-codes. We label this the 'Donut Effect' reflecting the movement of activity out of city centers to the suburban ring. Second, while this observed reallocation occurs within cities, we do not see major reallocation across cities. That is, there is less evidence for large-scale movement of activity from large US cities to smaller regional cities or towns. We rationalize these findings by noting that working patterns post pandemic will frequently be hybrid, with workers commuting to their business premises typically three days per week. This level of commuting is less than pre-pandemic, making suburbs relatively more popular, but too frequent to allow employees to leave the cities containing their employer.
    Keywords: Covid-19; US 'donut effect'; migration patterns; firm-specific shocks; earnings; coronavirus
    JEL: N0
    Date: 2021–09–02
  14. By: Harshil Sahai; Mike Bailey
    Abstract: This paper studies the role of social networks in spatial mobility across India. Using aggregated and de-identified data from the world's largest online social network, we (i) document new descriptive findings on the structure of social networks and spatial mobility in India; (ii) quantify the effects of social networks on annual migration choice; and (iii) embed these estimates in a spatial equilibrium model to study the wage implications of increasing social connectedness. Across millions of individuals, we find that multiple measures of social capital are concentrated among the rich and educated and among migrants. Across destinations, both mobility patterns and social networks are concentrated toward richer areas. A model of migration suggests individuals are indifferent between a 10% increase in destination wages and a 12-16% increase in destination social networks. Accounting for networks reduces the migration-distance relationship by 19%. In equilibrium, equalizing social networks across locations improves average wages by 3% (24% for the bottom wage-quartile), a larger impact than removing the marginal cost of distance. We find evidence of an economic support mechanism, with destination economic improvements reducing the migration-network elasticity. We also find suggestive evidence for an emotional support mechanism from qualitative surveys among Facebook users. Difference-in-difference estimates suggest college attendance delivers a 20% increase in network size and diversity. Taken together, our data suggest that - by reducing effective moving costs - increasing social connectedness across space may have considerable economic gains.
    Date: 2022–03
  15. By: BRONDINO Gabriele
    Abstract: Since the end of the last century, there has been an increasing trend of production fragmentation. Although all manufacturing sectors have become globalised to some degree, the case of automotive and garment stand out. This report analyses the trends in employment, value added and functional income distribution of the automotive and garment supply chains of Germany, Spain, Romania, Indonesia and Mexico for 2000-2014. It also focuses on the spatial and sectoral distribution of these variables. The empirical framework for the analysis is the multiregional input-output model. The data employed comes from the World Input-Output Database, Release 2016. The heterogeneity of the selected producer countries selected allows to provide a rich picture of the alternative organisations of global supply chains across different regions.
    Keywords: automotive, garment, production fragmentation, automation, employment, value added
    Date: 2022–03
  16. By: Schmid, Ramona
    Abstract: This study presents new evidence on immigrant-native wage differentials estimated in consideration of regional differences regarding the presence of Non-German population in metropolitan and non-metropolitan areas between 2000 and 2019 in Germany. Using linked employer-employee-data, unconditional quantile regression models are estimated in order to assess the degree of labor market integration of foreign workers. Applying an extended version of the Oaxaca-Blinder decomposition method, the results provide evidence on driving factors behind wage gaps along the entire wage distribution. There are not only changes in the relative importance of explanatory factors over time, but also possible sources of wage differentials shift between different points of the wage distribution. Differentiating between various areas in Germany, on average, larger wage gaps are revealed in metropolitan areas with at the same time a higher presence of the foreign population. Regarding the size of overall estimated wage gaps, after 2012 a reversal in trend and particular increasing tendencies around median wages are identified.
    Keywords: Immigrant-native wage gap,Oaxaca-Blinder decomposition,unconditional quantile regression,ethnic clustering,Germany
    JEL: J15 J31 J61 R23 R58
    Date: 2022

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