nep-geo New Economics Papers
on Economic Geography
Issue of 2022‒06‒20
fourteen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. The Regional Development Trap in Europe By Andreas Diemer; Simona Iammarino; Andres Rodriguez-Pose; Michael Storper
  2. Regional Structural Change and the Effects of Job Loss By Arntz, Melanie; Ivanov, Boris; Pohlan, Laura
  3. Improving government quality in the regions of the EU and its system-wide benefits for cohesion policy By Barbero, Javier; Christensen, Martin; Conte, Andrea; Lecca, Patrizio; Rodríguez-Pose, Andrés; Salotti, Simone
  4. The Effect of Working from Home on the Agglomeration Economies of Cities: Evidence from Advertised Wages By Liu, Sitian; Su, Yichen
  5. Canonical correlation complexity of European regions By Nomaler, Önder; Verspagen, Bart
  6. The Geographic Effects of Monetary Policy By Juan Herreno; Mathieu Pedemonte
  7. Approximating the impact of COVID-19 on regional production in countries with scarce subnational data. A proposal and application for Argentina during the first wave By Niembro, Andrés; Calá, Carla Daniela
  8. Regional Science Meets the Past: What Do Coin Finds Tell Us About the Ancient Spatial Economy? By Haddad, Eduardo; Araújo, Inácio
  9. Differentiating artificial intelligence capability clusters in Australia By Bratanova, Alexandra; Pham, Hien; Mason, Claire; Hajkowicz, Stefan; Naughtin, Claire; Schleiger, Emma; Sanderson, Conrad; Chen, Caron; Karimi, Sarvnaz
  10. Exchanging money for love? A regional analysis of EU cohesion policy on euroscepticism By Bayerlein, Michael; Diermeier, Matthias
  11. A cohesion policy analysis for Romania towards the 2021-2027 programming period By Francesca Crucitti; Nicholas-Joseph Lazarou; Philippe Monfort; Simone Salotti
  12. Partnerships for Regional Innovation (PRI) Playbook By Dimitrios Pontikakis; Ignacio Gonzalez Vazquez; Guia Bianchi; Marina Ranga; Anabela Marques Santos; Ramojus Reimeris; Solange Mifsud; Kevin Morgan; Carmen Madrid; Johan Stierna
  13. Impacto regional de las regalías en Colombia By Eduardo A. Haddad; Jaime Bonet-Morón; Gerson Javier Pérez-Valbuena
  14. Auswirkungen der Corona-Pandemie auf das gewerbliche Gründungsgeschehen 2020: Eine regionale Analyse By Kay, Rosemarie; Kranzusch, Peter; Nielen, Sebastian

  1. By: Andreas Diemer; Simona Iammarino; Andres Rodriguez-Pose; Michael Storper
    Abstract: The concept of regional development trap refers to regions that face significant structural challenges in retrieving past dynamism or improving prosperity for their residents. This article introduces and measures the concept of the regional development trap for regions in Europe. The concept draws inspiration from the middle-income trap in international development theory but widens it to shed light on traps in higher-income countries and at the regional scale. We propose indicators—involving the economic, productivity, and employment performance of regions relative to themselves in the immediate past, and to other regions in their respective countries and elsewhere in Europe—to identify regions either in a development trap or at significant near-term risk of falling into it. Regions facing development traps generate economic, social, and political risks at the national scale but also for Europe as a whole.
    Keywords: development trap, middle-income, economic growth, employment, productivity, regions, Europe
    Date: 2022–05
  2. By: Arntz, Melanie (ZEW Mannheim); Ivanov, Boris (ZEW); Pohlan, Laura (Institute for Employment Research (IAB), Nuremberg)
    Abstract: Routine-intensive occupations have been declining in many countries, but how does this affect individual workers’ careers if this decline is particularly severe in their local labor market? This paper uses administrative data from Germany and a matched difference-in-differences approach to show that the individual costs of job loss strongly depend on the task-bias of regional structural change. Workers displaced from routine manual occupations have substantially higher and more persistent employment and wage losses in regions where such occupations decline the most. Regional and occupational mobility partly serve as an adjustment mechanism, but come at high cost as these switches also involve losses in firm wage premia. Non-displaced workers, by contrast, remain largely unaffected by structural change.
    Keywords: routine-biased structural change, local labor markets, displacement, mass-layoffs, plant closures, matching, difference-in-differences, event study
    JEL: J24 J63 J64 J65 O33 R11
    Date: 2022–05
  3. By: Barbero, Javier; Christensen, Martin; Conte, Andrea; Lecca, Patrizio; Rodríguez-Pose, Andrés; Salotti, Simone
    Abstract: We quantify the general equilibrium effects on economic growth of improving the quality of institutions at the regional level in the context of the implementation of the European Cohesion Policy for the European Union and the UK. The direct impact of changes in the quality of government is integrated in a general equilibrium model to analyse the system-wide economic effects resulting from additional endogenous mechanisms and feedback effects. The results reveal a significant direct effect as well as considerable system-wide benefits from improved government quality on economic growth. A small 5 per cent increase in government quality across European Union regions increases the impact of Cohesion investment by up to 7 per cent in the short run and 3 per cent in the long run. The exact magnitude of the gains depends on various local factors, including the initial endowments of public capital, the level of government quality, and the degree of persistence over time.
    Keywords: cohesion; economic growth; EU; government quality; public investment; regions
    JEL: J1
    Date: 2022–04–25
  4. By: Liu, Sitian; Su, Yichen
    Abstract: We analyze the effect of working from home on the agglomeration economies of large cities and the aggregate productivity implications of such effect. Using advertised wages from job ads, we show that occupations with the highest work-from-home adoption during the COVID-19 pandemic saw a strong decrease in the urban wage premium. The decline in the urban wage premium is accompanied by an exodus of employment (based on firms' locations) from large cities to small cities. In contrast, occupations with low or moderate levels of work-from-home adoption saw little overall reduction in the urban wage premium. The empirical evidence in our paper points to weakened agglomeration economies in large cities among professions with the highest prevalence of working from home. A decomposition exercise reveals that a sizable portion of the decline in the urban wage premium is driven by the decline in the urban wage premium of relationship-building skills, suggesting the decreased agglomeration effect in large cities is at least partially a result of reduced occurrence of interactive activities.
    Keywords: Agglomeration; Productivity; Spillover; Urban Wage Premium; Working from Home; Remote; Virtual; WFH; Wages; Job Posting; COVID-19; Pandemic
    JEL: J24 J31 R12 R23
    Date: 2022–05–13
  5. By: Nomaler, Önder (UNU-MERIT, Maastricht University); Verspagen, Bart (UNU-MERIT, Maastricht University)
    Abstract: In an earlier paper (Nomaler & Verspagen, 2022) we introduced a 'supervised learning' based alternative to the competing unsupervised learning algorithms (e.g., Hidalgo and Hausmann, 2009 vs. Tacchella et al, 2012) proposed in the so-called 'economic complexity' literature. Similar to the existing ones, our alternative, which we refer to as the "Canonical Correlation Complexity Method (CCCM)", also aims at reducing the high dimensionality in data on the empirical patterns of co-location (be it nations or regions) of specializations in products or technologies, while the ultimate objective is to understand the relationship between specialization, diversification, and economic development. In our alternative method which combines the toolkit of the Canonical Correlation Analysis with that of Principal Component Analysis, the data on trade or technology specializations and multiple dimensions of economic development are processed together from the very beginning in order to identify the patterns of mutual association. This way, we are able to identify the products or technologies that can be associated with the level or the growth rate of per capita GDP, and (un)employment. In this follow up paper, we use the CCCM to analyse the development patterns of European regions in relation to their respective technology specializations. Our findings provide insights for EU's industrial policies, especially those considered under the 'smart specialization' framework.
    Keywords: Economic complexity, economic development, supervised learning, Canonical Correlation Analysis, Principal Component Analysis, technological specialization, revealed technological advantage, European regional development, smart specialization
    JEL: F14 F63 O11 O33 R11
    Date: 2022–04–22
  6. By: Juan Herreno; Mathieu Pedemonte
    Abstract: We study the differential regional effects of monetary policy exploiting geographical heterogeneity in income across cities in the United States. We find that prices and employment in poorer cities react more to monetary policy shocks. The results for prices hold for a wide range of narrow consumer expenditure categories. The results are consistent with New Keynesian models that allow for a differential share of hand-to-mouth consumers across regions, but not with models in which regions have different slopes of the Phillips curve. We show that an increase in heterogeneity across cities amplifies the effect of monetary policy on prices and employment.
    Keywords: Heterogeneous Effects of Monetary Policy; Monetary Union; TANK
    JEL: E31 E24 E52 E58 F45
    Date: 2022–05–12
  7. By: Niembro, Andrés; Calá, Carla Daniela
    Abstract: In this paper we propose an index to approximate the territorial economic impact of the COVID-19 pandemic in contexts with scarce or outdated regional data, which is often the case in developing countries. This index is based on data that are usually available in most countries: a) the sectoral productive structure of the regions, b) the operational level of each sector, c) the mobility of workers in each region, and d) the possibility of remote work among sectors. The empirical application for Argentina describes the impact of the pandemic on regional production during the second and third quarters of 2020, both for the provinces and labor market areas. Our results show that the regional impact of COVID-19 on private economic activity was highly heterogeneous between and within provinces. The proposed index is also highly correlated with sporadic official data coming from national agencies, while it has a wider geographical and temporal scope, especially in terms of labor market areas.
    Keywords: Indices; Impacto Económico; Análisis Provincial; Aislamiento Social; COVID-19;
    Date: 2021
  8. By: Haddad, Eduardo (Departamento de Economia, Universidade de São Paulo); Araújo, Inácio (Departamento de Economia, Universidade de São Paulo)
    Abstract: The spurt of data and organized quantitative information from different archaeological sources has challenged established truths about the ancient economy in the last three decades. The range of tools and techniques for exploiting these archaeological sources has also grown dramatically. As a result, new questions are raised, which put our sources in a broader context that increasingly favors the long-term perspective. In this paper, we discuss, using a case study, how the use of numbers can shed light in the study of ancient Roman history, with a particular interest in its economy. Our illustrative exercises focus on the use of regional science approaches, a discipline at the crossroads of economics and geography. Departing from a general equilibrium conceptual framework, we are particularly interested in Sir Alan G. Wilson’s seminal contributions as conducive to our exploration of digital numismatic databases to unravel spatial processes in the ancient world. Deriving from universal laws of physics, we will explore principles of spatial interaction modeling applied to numismatic data for the late Roman Republic that will help understand spatial interaction processes in the ancient Roman economy in the last two centuries BCE. By measuring, mapping, and modeling archaeological observations (i.e., numismatic records), we expect to make sense of patterns in the data formally and to use these insights comparatively and longitudinally, as preconized by different authors.
    Keywords: spatial networks; Roman economy; numismatics; spatial interaction; regional science
    JEL: C21 F15 N90 R12
    Date: 2022–05–17
  9. By: Bratanova, Alexandra; Pham, Hien; Mason, Claire; Hajkowicz, Stefan; Naughtin, Claire; Schleiger, Emma; Sanderson, Conrad; Chen, Caron; Karimi, Sarvnaz
    Abstract: We demonstrate how cluster analysis underpinned by analysis of revealed technology advantage can be used to differentiate geographic regions with comparative advantage in artificial intelligence (AI). Our analysis uses novel datasets on Australian AI businesses, intellectual property patents and labour markets to explore location, concentration and intensity of AI activities across 333 geographical regions. We find that Australia's AI business and innovation activity is clustered in geographic locations with higher investment in research and development. Through cluster analysis we identify three tiers of AI capability regions that are developing across the economy: ‘AI hotspots’ (10 regions), ‘Emerging AI regions’ (85 regions) and ‘Nascent AI regions’ (238 regions). While the AI hotspots are mainly concentrated in central business district locations, there are examples when they also appear outside CBD in areas where there has been significant investment in innovation and technology hubs. Policy makers can use the results of this study to facilitate and monitor the growth of AI capability to boost economic recovery. Investors may find these results helpful to learn about the current landscape of AI business and innovation activities in Australia.
    Keywords: Artificial intelligence, cluster, revealed technology advantage, regional innovation, Australia
    JEL: O31 O33 O38 R12
    Date: 2022–05–31
  10. By: Bayerlein, Michael; Diermeier, Matthias
    Abstract: In the past, the European Union seems to have been able to tame Euroscepticism through regional 'convergence' funding. After the Eastern enlargement of the Union, however, this relationship needs to be put to the test. Not only have the new member states become the main recipients of EU funding, Eastern Europe has also changed from once being the most integration-friendly region to displaying the most integration-hostile attitudes in the EU. Motivated by this empirical puzzle, we revisit the relationship between structural 'convergence' funding and Euroscepticism and ask where - if at all - is the EU's convergence spending still able to tame Euroscepticism. Most surprisingly, correlation analyses reveal that between 2006 and 2018 larger regional subsidies go along with increasing opposition to EU integration. We can rebut this counterintuitive finding by a Diff-in-Diff approach that reveals an increasing Euroscepticism in Eastern European regions between 2006 and 2014. Nevertheless, also these more advanced models fail to establish a positive relationship between regional funding eligibility and pro-integrationist attitudes. Finally, fuzzy RDD models exploit the funding assignment rule and corroborate that the EU is no longer able to pacify integration-critical regions by their simply increasing 'convergence' funding. Nevertheless, the EU has won support in Eastern Europe where EU investments are perceived (positively). In designing a strategy to win back support for EU integration, Brussels does not need more fiscal capacity but rather has to design 'convergence' funding that is visible as well as clearly attributable to its donor.
    Keywords: Euroscepticism,cohesion policy,EU transfers,methodology,regional analysis
    JEL: D72 F14 H11 I38
    Date: 2022
  11. By: Francesca Crucitti (European Commission - JRC); Nicholas-Joseph Lazarou (European Commission - JRC); Philippe Monfort (European Commission - DG REGIO); Simone Salotti (European Commission - JRC)
    Abstract: We present an analysis on cohesion policy investments in the regions of Romania using the spatial dynamic general equilibrium model RHOMOLO in order to provide useful insights on the 2021-2027 programmes and their implications for growth and development. The analysis is based on a hypothetical distribution of the funding across the following fields of intervention: aid to the private sector, research and development, transport infrastructure, other infrastructure, and human capital. These interventions are modelled using a mix of demand and supply side shocks. We find that a projected €31.3 billion of cohesion policy funding would increase Romanian GDP by 3.8% at the end of the 10-years implementation period with respect to the no policy scenario. Our results suggest that there seems to be an equity-efficiency trade-off in Romania: in most cases, the returns of the policy in terms of GDP are maximised by investing in the capital city region, at the expense of worsening regional disparities. For some fields of intervention, though, the spillovers generated in the less developed regions are so large that the national GDP impact is similar when investing there rather than in the capital city region.
    Keywords: RHOMOLO, Cohesion Policy, regional growth, regional development, Romania
    JEL: C68 R13
    Date: 2022–05
  12. By: Dimitrios Pontikakis (European Commission - JRC); Ignacio Gonzalez Vazquez (European Commission - JRC); Guia Bianchi (European Commission - JRC); Marina Ranga (European Commission - JRC); Anabela Marques Santos (European Commission - JRC); Ramojus Reimeris (European Commission - JRC); Solange Mifsud (European Commission - JRC); Kevin Morgan (Cardiff University); Carmen Madrid (European Commission - JRC); Johan Stierna (European Commission - JRC)
    Abstract: Partnerships for Regional Innovation (PRI) aspires to become a strategic framework for innovation-driven territorial transformation, linking EU priorities with national plans and place-based opportunities and challenges. In its current form, the PRI Playbook presents an initial approach to the construction of this framework developed by the European Commission’s Joint Research Centre, supported by a scientific committee of renowned experts, and is to be further co-created, adapted and tested in a pilot phase with several EU territories. The PRI Playbook is published together with the “Concepts and Rationales for the PRI Playbook”. This document includes the analytical background and the aims of the PRI initiative, by drawing on key academic and grey literatures, as well as the expertise of the scientific committee of PRI. Finally, the Executive summary provides a concise overview of the Playbook main concepts and approaches to co-creating Partnerships for Regional Innovation.
    Keywords: Twin transition, innovation, sustainability, SDGs, European Green Deal
    Date: 2022–05
  13. By: Eduardo A. Haddad; Jaime Bonet-Morón; Gerson Javier Pérez-Valbuena
    Abstract: La extracción de recursos naturales no renovables tiene el potencial de generar ingresos para financiar las actividades del gobierno. Una de las herramientas fiscales más usadas es el cobro de regalías a proyectos mineros ya que suelen estar desligadas de la rentabilidad de estos. Las regalías tienen diferentes canales para impactar positivamente el desarrollo regional, los cuales en algunos casos pueden tener efectos contrarios. Usando un modelo de equilibrio general regional computable, este documento estima los efectos del pago de regalías por parte de las actividades mineras en el desarrollo regional en Colombia. Los resultados evidencian que los beneficios en el bienestar y la reducción de las desigualdades regionales por la imposición de regalías, son mayores que las pérdidas que puede generar en el producto regional. Adicionalmente, se encontraron evidencias de efectos heterogéneos por región y por sector. **** ABSTRACT: The extraction of non-renewable natural resources has the potential to generate revenue to finance government activities. One of the most used tax tools is the collection of royalties from mining projects because they are usually unrelated to their profitability. Royalties often have different channels to have a positive impact on regional development, which in some cases can have opposite effects. Using a computable regional equilibrium model, this paper estimates the general equilibrium effects of royalty payments by mining activities in the regional development in Colombia. The results indicate that the benefits in welfare and the reduction of regional inequalities due to the imposition of royalties, are greater than the losses that it can generate in the regional output. Further results show the presence of regional and sectoral heterogeneities.
    Keywords: Regalías, desarrollo regional, modelo de equilibrio regional computable, Royalties, regional development, CGE model
    JEL: H77 R12 R13
    Date: 2022–05
  14. By: Kay, Rosemarie; Kranzusch, Peter; Nielen, Sebastian
    Abstract: Basierend auf der Gewerbeanzeigenstatistik und vielfältigen weiteren Informationen zum Gründungsökosystem untersuchen wir die Auswirkungen der Covid19-Pandemie auf das Gründungsgeschehen in den 401 Kreisen und kreisfreien Städten in Deutschland. Die Pandemie hat - neben der Novellierung der Handwerksordnung - in der Mehrzahl der Kreise zu einem Rückgang der Existenzgründungsintensität geführt. Das Ausmaß dieser Rückgänge variiert ebenso wie das Ausmaß der Anstiege erheblich. Regionale Faktoren des Gründungsökosystems scheinen auf diese Entwicklung jedoch kaum Einfluss ausgeübt zu haben. Der durch die Pandemie ausgelöste ökonomische Schock hat die Pfadabhängigkeit der Entwicklung des Gründungsgeschehens in den Regionen offenbar nicht gebrochen.
    Keywords: Regional start-up activities,Covid19 pandemic,Germany,Regionales Gründungsgeschehen,Covid19-Pandemie,Deutschland
    JEL: L26 R11
    Date: 2022

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