nep-geo New Economics Papers
on Economic Geography
Issue of 2022‒07‒18
sixteen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Local Public Goods and the Spatial Distribution of Economic Activity By Arthur Guillouzouic--Le Corff; Emeric Henry; Joan Monras
  2. High-Speed Rail: a panel data impact evaluation by Municipalities on depopulation and unemployment By Cobos, Carlos; Escribano, Álvaro
  3. Using hierarchical aggregation constraints to nowcast regional economic aggregates By Gary Koop; Stuart McIntyre; James Mitchell; Aubrey Poon
  4. Policy Diffusion and Polarization across U.S. States By Stefano DellaVigna; Woojin Kim
  5. Economic complexity and inequality at the national and regional level By Flavio L. Pinheiro; Dominik Hartmann
  6. The Returns to Face-to-Face Interactions: Knowledge Spillovers in Silicon Valley By David Atkin; M. Keith Chen; Anton Popov
  7. College Openings and Local Economic Development By Berlingieri, Francesco; Gathmann, Christina; Quinckhardt, Matthias
  8. (Co-)Working in Close Proximity: Knowledge Spillovers and Social Interactions By Maria P. Roche; Alexander Oettl; Christian Catalini
  9. Beyond Lost Earnings: The Long-Term Impact of Job Displacement on Workers’ Commuting Behavior By Duan, Yige; Jost, Oskar; Jost, Ramona
  10. Convergence across Subnational Regions of Bangladesh – What the Night Lights Data Say? By Syed Abul, Basher; Jobaida, Behtarin; Salim, Rashid
  11. Language as a regional driver of the trade of place-sensitive products: The case of made-in-Italy goods By Amir Maghssudipour; Annalisa Caloffi; Marco Bellandi; Letizia Donati
  12. Climate Change and Measures of Economic Growth:Solving the Spatial Mismatch Problem By Devina Lakhtakia; Ross McKitrick
  13. Building a Suite of Subnational Socioeconomic Indicators for the United Kingdom: Opportunities, Challenges and Recommendations By Sharada Nia Davidson; Kevin Connolly; Ciara Crummey; Niccolo Brazzelli; Mairi Spowage
  14. Three essays on spatial frictions By Pierre Cotterlaz
  15. Using Text Data to Improve Industrial Statistics in the UK By Alex Bishop; Juan Mateos-Garcia; George Richardson
  16. Wachstumsimpulse durch Erreichbarkeitspotenziale am Beispiel von Mittelzentren zwischen Metropolregionskernen By Ramms, Thilo; Wedemeier, Jan

  1. By: Arthur Guillouzouic--Le Corff (IPP - Institut des politiques publiques); Emeric Henry (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research - CEPR); Joan Monras (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, UPF - Universitat Pompeu Fabra [Barcelona])
    Abstract: Using French data, we provide: a) causal evidence that a drop in local public goods provision decreases private sector activity, and b) evidence consistent with monopsony power of the public sector in local labor markets. We introduce a public sector with these two key characteristics in an otherwise standard spatial equilibrium model, and show that it delivers the main stylized facts established in our data, in particular, that the share of the public sector relative to the private is independent of the productivity of the city. We emphasize the tradeoffs between allowing governments to freely choose local public employment and wages (as in most of the US public sector), versus imposing rules that constrain public sector pay with some indexation to the local cost of living (as in many European countries). We show that wage indexation limits monopsony power – leading to a larger public sector – and is optimal if the indexation is sufficiently strong.
    Keywords: Local public goods,Public service,Market power,Spatial economics
    Date: 2021–06–01
  2. By: Cobos, Carlos; Escribano, Álvaro
    Abstract: The research is focused on the impact of High-Speed Rail (HSR) by Municipalities on population density and unemployment, based on economic and demographic variables of Spain. For that purpose, we construct a panel for a 15-years period (1998-2012) where the treatment variable HSR takes the value of 1 when the municipality is within an area of 10 km from the train station, allowing for the size of the municipality to interact with HSR. Two different samples are considered: all the municipalities and by HSR corridors.To evaluate the transport service impact, a Difference in Difference technique is applied to different model specifications to isolate the HSR effects, after controlling for relevant variables. A simultaneous equation panel data model is estimated, equation by equation by ordinary least squares and by dynamic ordinary least squares, with robust empirical results. Reallocation effects on the population are observed in the national sample, with positive effects on small cities and little municipalities (20,000 people). Only the South and North corridors show positive net results on population density. With respect to unemployment, the effects are not so clear. At the national level, only small municipalities (
    Keywords: High-Speed Rail; Municipalities; Radial Infrastructure Network; Depopulation; Unemployment; Reallocation Effects By Corridors
    JEL: R1 R12 R14 R23 R41 R58
    Date: 2022–06–24
  3. By: Gary Koop; Stuart McIntyre; James Mitchell; Aubrey Poon
    Abstract: Recent decades have seen advances in using econometric methods to produce more timely and higher frequency estimates of economic activity at the national level, enabling better tracking of the economy in real-time. These advances have not generally been replicated at the sub-national level, likely because of the empirical challenges that nowcasting at a regional level present, notably, the short time series of available data, changes in data frequency over time, and the hierarchical structure of the data. This paper develops a mixed-frequency Bayesian VAR model to address common features of the regional nowcasting context, using an application to regional productivity in the UK. We evaluate the contribution that different features of our model provide to the accuracy of point and density nowcasts, in particular the role of hierarchical aggregation constraints. We show that these aggregation constraints, imposed in stochastic form, play a key role in delivering improved regional nowcasts; they prove more important than adding region specific predictors when the equivalent national data are known, but not when this aggregate is unknown.
    Keywords: bayesian methods, mixed frequency nowcasting, real-time data, regional data
    JEL: C32 C53 E37
    Date: 2022–03
  4. By: Stefano DellaVigna; Woojin Kim
    Abstract: Economists have studied the impact of numerous state laws, from welfare rules to voting ID requirements. Yet for all this policy evaluation, what do we know about policy diffusion—how these policies spread from state to state? We present a series of facts based on a data set of over 700 U.S. state policies spanning the past 7 decades. First, considering the introduction of new laws, state capacity seems to have a small role, in that larger and richer states are only slightly more likely to innovate policy. Second, the diffusion of policies from 1950 to 2000 is best predicted by proximity: a state is more likely to adopt a policy if nearby states have already done so. Third, instead since 2000, political alignment outperforms geographic proximity in predicting diffusion. Fourth, the diffusion of COVID state policies, as opposed to vaccination mandates since the 1970s, follows similar patterns of political polarization. Models of learning and correlated preferences could account for these patterns, including the decreased role of geography over time, if ideas spread more easily and preference correlation has become more political than geographical. We document, however, a role for party control: similarity in state party control predicts policy adoption in the last two decades, even controlling for voter political preferences. We conclude that party polarization has emerged as a key factor recently for policy adoption. Finally, building on these results, we broadly classify the patterns of policy diffusion in a set of difference-in-differences papers.
    JEL: D04 H3 J68
    Date: 2022–06
  5. By: Flavio L. Pinheiro; Dominik Hartmann
    Abstract: Recent studies have found evidence of a negative association between economic complexity and inequality at the country level. Moreover, evidence suggests that sophisticated economies tend to outsource products that are less desirable (e.g. in terms of wage and inequality effects), and instead focus on complex products requiring networks of skilled labor and more inclusive institutions. Yet the negative association between economic complexity and inequality on a coarse scale could hide important dynamics at a fine-grained level. Complex economic activities are difficult to develop and tend to concentrate spatially, leading to 'winner-take-most' effects that spur regional inequality in countries. Large, complex cities tend to attract both high- and low-skills activities and workers, and are also associated with higher levels of hierarchies, competition, and skill premiums. As a result, the association between complexity and inequality reverses at regional scales; in other words, more complex regions tend to be more unequal. Ideas from polarization theories, institutional changes, and urban scaling literature can help to understand this paradox, while new methods from economic complexity and relatedness can help identify inclusive growth constraints and opportunities.
    Date: 2022–06
  6. By: David Atkin; M. Keith Chen; Anton Popov
    Abstract: The returns to face-to-face interactions are of central importance to understanding the determinants of agglomeration. However, the existing literature studying patterns of geographic proximity in patent citations or industrial co-location has struggled to disentangle the benefits of face-to-face interactions from other spatial spillovers. In this paper, we use highly granular smartphone geolocation data to measure face-to-face interactions (or meetings) between workers at different establishments in Silicon Valley. To study the degree to which knowledge flows result from such interactions, we explore the relationship between these meetings and the citations among the firms these workers belong to. As firms may organize meetings with those they wish to learn from, we isolate causal impacts of face-to-face meetings by instrumenting with the meetings between workers in adjacent firms that belong to unconnected industries. Our IV approach estimates substantial returns to face-to-face meetings with overidentification tests suggesting we are capturing the returns to serendipity that play a central role in the urban theories of Jane Jacobs.
    JEL: O18 O30 R3
    Date: 2022–06
  7. By: Berlingieri, Francesco (European Commission Joint Research Centre (JRC)); Gathmann, Christina (LISER); Quinckhardt, Matthias (Heidelberg University)
    Abstract: We study how the presence of a college affects the local economy using administrative data. Our analysis exploits the opening of new institutions of tertiary education across Germany in the 1980s and 1990s. The new college substantially increased the student population and share of high-skilled workers in the region. Yet, we find no effect on regional wages or employment indicating that the local economies did not experience additional growth through skill-biased technological change, for instance. Instead, there is sizable heterogeneity in the local gains: high-tech firms in manufacturing absorb most of the new college graduates, esp. in engineering professions. We find little impact on the low- or high-skilled service sector or employment in managerial professions. Finally, we show that local labor market conditions prior to the opening matter: in regions with a more dynamic labor market, the opening encourages firm creation and a permanent upskilling of the workforce. Areas with a less dynamic labor market experience little sustained growth in high-skilled workers who are absorbed by incumbent firms.
    Keywords: colleges, local labor markets, human capital, substitutability
    JEL: J24 J31 J61 I23 I25
    Date: 2022–06
  8. By: Maria P. Roche; Alexander Oettl; Christian Catalini
    Abstract: We examine the influence of physical proximity on between-startup knowledge spillovers at one of the largest technology co-working hubs in the United States. Relying on the random assignment of office space to the hub's 251 startups, we find that proximity positively influences knowledge spillovers as proxied by the likelihood of adopting an upstream web technology already used by a peer startup. This effect is largest for startups within close proximity of each other and quickly decays: startups more than 20 meters apart on the same floor are indistinguishable from startups on different floors. The main driver of the effect appears to be social interactions. While startups in close proximity are most likely to participate in social co-working space events together, knowledge spillovers are greatest between startups that socialize but are dissimilar. Ultimately, startups that are embedded in environments that have neither too much nor too little diversity perform better, but only if they socialize.
    JEL: M13 O3 O33 R12
    Date: 2022–06
  9. By: Duan, Yige (University of British Columbia); Jost, Oskar (Institute for Employment Research (IAB), Nuremberg, Germany); Jost, Ramona (Institute for Employment Research (IAB), Nuremberg, Germany)
    Abstract: "We study the long-term impact of job displacement on workers’ commuting behavior. Our measures of commuting exploit geo-coordinates of workers’ places of residence and places of work, from which we calculate the door-to-door commuting distance and commuting time. Using German employee-employer matched data and an event study design, we identify the causal effect of job loss on workers displaced during a mass layoff. Conditional on finding a new job, workers’ commuting distance and commuting time rise sharply after displacement and gradually decline in subsequent years. The recovery is due to employer changes rather than migration, and a larger increase in commuting would mitigate the wage loss due to job displacement. To rationalize our findings, we build an on-the-job search model with heterogeneous firm productivity and commuting distances. Our model predicts a joint recovery of wages and commuting despite a static tradeoff between the two attributes." (Author's abstract, IAB-Doku) ((en))
    Keywords: IAB-Open-Access-Publikation
    JEL: J30 J60 R23 R40
    Date: 2022–06–15
  10. By: Syed Abul, Basher; Jobaida, Behtarin; Salim, Rashid
    Abstract: We examine economic convergence among subnational regions of Bangladesh over the period 1992-2013. Unavailability of the traditional gross domestic product (GDP) for subnational areas and building on findings of recent luminosity literature, we use night lights intensity as a proxy for local economic activity to test the convergence hypothesis. Our results show the existence of both absolute and conditional convergence in night lights intensity, but with a very long half-life of convergence. Moreover, the results also indicate sigma divergence. Together, these findings suggest that regional disparity is persistent and wide across Bangladesh's 544 upazilas (subdistricts). There is evidence that lagging upazilas are catching up with the better off ones, but many are also converging with their neighbors or peers (a phenomenon known as “club convergence”). Overall, consistent with the evidence from studies on regional inequality in Bangladesh, our results also indicate that there is an “east-west” divide in luminosity across the subnational units in Bangladesh.
    Keywords: Convergence, Regional disparity, Bangladesh, Night lights
    JEL: O47 R11
    Date: 2022–01–15
  11. By: Amir Maghssudipour; Annalisa Caloffi; Marco Bellandi; Letizia Donati
    Abstract: We investigate the relationship between language and international trade of place-sensitive products at a regional level. Focusing on ‘made in Italy’, we assess whether its trade is influenced by Italian migrants and organisations offering Italian language courses in the importing region. To analyse this relationship, we collected an original database of 147 regions, on which we estimated Poisson pseudo maximum likelihood regressions, also controlling for various country effects across trading regions. Results show that the trade of made-in-Italy goods is positively associated with the diffusion of the Italian language in the regions. This does not apply to goods produced in Italy that are not characteristic of ‘made in Italy’.
    Keywords: international trade, place-sensitive products, made in Italy, Italian migration, Italian language
    JEL: F14 R10 R23
    Date: 2022
  12. By: Devina Lakhtakia (Department of Economics and Finance, University of Guelph, Guelph ON Canada); Ross McKitrick (Department of Economics and Finance, University of Guelph, Guelph ON Canada)
    Abstract: Many studies have been undertaken to quantify the economic costs of climate change. However, while climate data is measured at a grid cell level, economic data are measured at the national level. In order to form correct damage estimates researchers must reconcile the two. Aggregating climate data up to the national level has been the more common approach but results are sensitive to how the averaging is done and the averaging process itself can bias the results. An alternative approach has been to project economic data down to the grid cell level. Nordhaus (2006) developed the G-Econ database to do this, but while it provides considerable spatial detail it provides only four quinquennial observations per cell from 1990 to 2005. We develop herein a model to predict within-grid cell economic activity using national, regional and local economic activity. The latter is measured using a unique dataset showing annual fight volumes at hundreds of urban and rural airports worldwide from 1976 to 2010. We show that the model has a high level of explanatory power and can be used in an iterative algorithm to infill and extrapolate the G-Econ data base to provide annual observations for grid cells in approximately 150 countries over the 1976 to 2010 interval. We supplement this with satellite nightlight data which provides even more spatial detail but over a shorter time frame.
    Keywords: Gross cell product, climate change, economic growth
    JEL: Q54 Q56 R11
    Date: 2022
  13. By: Sharada Nia Davidson; Kevin Connolly; Ciara Crummey; Niccolo Brazzelli; Mairi Spowage
    Abstract: The UK government’s levelling up agenda has triggered renewed interest in regional disparities. However, for several years, there has been a growing consensus across the UK that better subnational statistics are required to support policymaking and analysis. This paper assesses the challenges and opportunities associated with building a suite of subnational socioeconomic indicators. Such a suite would facilitate the creation of profiles of local areas across the UK's four nations. By reviewing current international practise, the UK policy and geographical landscape and the vast array of indicators which could be included in a suite, we provide six sets of recommendations. Specifically, we address: which indicators should be included; the timeliness and geographical granularity required; the extent to which indicators should be comparable across the four nations; how measurement, comparability issues and data gaps can be minimised; and how such data should be disseminated.
    Keywords: data collection, industrial policy, levelling up, rebalancing, survey methods
    JEL: C82 C83 H7 R12 R58
    Date: 2022–05
  14. By: Pierre Cotterlaz (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Spatial frictions are key to explain many economic phenomena. This thesis provides three pieces of evidence on the origins, prevalence and consequences of such frictions.In the first chapter, we focus on spatial frictions in the diffusion of knowledge. We explain the puzzling persistence and stability of the spatial decay in patent citation flows by innovator networks. We establish that knowledge percolates: firms disproportionately cite new patents from prior contacts, and form links with contacts of their contacts. Embedding this percolation into a network formation model is sufficient to rationalize the negative link between aggregate knowledge flows and distance.In the second chapter, we shed some light on the role of spatial information frictions in shaping international trade flows. We use the specific context of the XIXth Century, during which the creation of international news agencies facilitated the transmission of information across countries. We show that trade between a pair of countries increases when both are covered by a news agency. The reduction in information friction was therefore one of the many factors behind the First Globalization.The last chapter investigates whether transport costs are the main component of within-country trade costs. While it is well-established that international trade costs are not limited to transport costs, evidence is much scarcer for intra-national trade flows. We use hurricane Sandy as a natural experiment shifting upwards transport costs in some areas of the US to establish that if transport costs were the sole driver of the distance elasticity of trade flows within the US, this distance elasticity would be much lower.
    Abstract: Les frictions spatiales jouent un rôle crucial dans l'explication de nombreux phénomènes économiques. Dans cette thèse, nous étudions les origines, la prévalence et les conséquences de telles frictions à travers trois exemples. Dans le premier chapitre, nous nous intéressons aux frictions spatiales pesant sur la diffusion de la connaissance. Nous expliquons l'effet négatif de la distance sur les flux de citations entre brevets par la structure des réseaux d'innovation. Nous montrons que la connaissance percole: les entreprises tendent à citer davantage les nouveaux brevets de leurs contacts existants, et à former de nouveaux liens avec des contacts de leurs contacts. Dans le second chapitre, nous explorons les liens entre frictions informationnelles et commerce international. Nous utilisons le contexte spécifique du XIXe siècle, au cours duquel émergent des agences de presse mondiales, facilitant le partage d'informations sur les marchés étrangers. Nous montrons que deux pays commercent davantage une fois qu'ils bénéficient de ce choc positif sur la capacité à obtenir de l'information. Les agences de presse s'insèrent donc parmi les nombreux facteurs explicatifs de la Première Mondialisation. Le dernier chapitre cherche à déterminer si les coûts de transport constituent l'essentiel des obstacles au commerce à l'intérieur d'un pays. Nous utilisons l'ouragan Sandy comme une expérience naturelle à l'origine d'une hausse des coûts de transport pour les flux transitant par certaines zones, et montrons que l'élasticité intra-USA des flux commerciaux à la distance serait bien plus faible si les coûts de transport étaient les seuls responsables de cette élasticité.
    Keywords: Trade costs,Innovation,Networks,News agencies,Coûts du commerce,Réseaux,Agences de presse
    Date: 2021–06–03
  15. By: Alex Bishop; Juan Mateos-Garcia; George Richardson
    Abstract: We use business website data to explore the limitations of the Standard Industrial Classification taxonomy and develop a prototype for a bottom-up industrial taxonomy based on semantic similarities between company descriptions. This prototype makes it possible to decompose uninformative SIC codes into granular industries, build user-driven industry groups which might be of interest to policymakers (e.g. 'green economy') and build indices of local economic composition that are more strongly associated with local economic performance than those based on the SIC taxonomy. We consider potential avenues to combine official and bottom-up taxonomies in order to improve our understanding the economy and inform economic policy.
    Keywords: emerging industries, industrial policy, industrial taxonomy, machine learning, web data
    JEL: C81 L52 R12
    Date: 2022–01
  16. By: Ramms, Thilo; Wedemeier, Jan
    Abstract: Der Artikel beschreibt die Lage von Mittelzentren zwischen Metropolregionen und deren Bedeutung als Impulsgeberfür das demografische und wirtschaftliche Wachstum. Anhand von Standorten der norddeutschen Metropolregionen Hamburg, Nordwest (Bremen-Oldenburg) sowie Hannover-Braunschweig-Göttingen-Wolfsburg werden Erreichbarkeitspotenziale berechnet, um die relative Zentralität von Mittelzentren zu beschreiben. Die Mittelzentren weisen dabei teilweise eine höhere Zentralität auf als die Metropolregionen selbst und tragen zur Stabilisierung der regionalen Entwicklung in den Zwischenräumen bei. Aus dieser Beobachtung lassen sich zwei Schlussfolgerungen ableiten: Erstens, dass es eine Notwendigkeit für die Flexibilisierung des Zentrale-Orte-Konzepts gibt und zweitens, dass der räumlichen Planung in Zusammenarbeit mit der Regionalpolitik eine wichtige Rolle zukommt, um diese Zentren zu stärken.
    Keywords: Erreichbarkeitspotenziale,Mittelzentren,Metropolregionen,Raumplanung,Accessibility potential,Medium-sized centers,Metropolitan regions,spatial planning
    Date: 2022

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