nep-geo New Economics Papers
on Economic Geography
Issue of 2022‒09‒12
sixteen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. The regional development trap in Europe By Diemer, Andreas; Iammarino, Simona; Rodríguez-Pose, Andrés; Storper, Michael
  2. No Place like Home: Place-Based Attachments and Regional Science By Winters, John V.
  3. The spatial determinants of innovation diffusion: Evidence from global shipping networks By César Ducruet; Hidekazu Itoh
  4. Flow of Ideas : Economic Societies and the Rise of Useful Knowledge By Cinnirella, Francesco; Hornung, Eric; Koschnick, Julius
  5. Place-based Land Policy and Spatial Misallocation: Theory and Evidence from China By Min Fang; Libin Han; Zibin Huang; Ming Lu; Li Zhang
  6. Labor Misallocation Across Firms and Regions By Sebastian Heise; Tommaso Porzio
  7. College openings and local economic development By Berlingieri, Francesco; Gathmann, Christina; Quinckhardt, Matthias
  8. University proximity at teenage years and educational attainment By Oussama Ben Atta
  9. Sustained Economic Growth and Physical Capital Taxation in a Creative Region By Batabyal, Amitrajeet; Beladi, Hamid
  10. Place-Based Policies and the location of economic activity:evidence from the Italian Strategy for Inner areas By Gianluca Monturano; Giuliano Resce; Marco Ventura
  11. Brexit and the Fintech Revolution in Europe - Lessons from the Bulgarian Digital Finance Cluster By Deyan Radev; Georgi Penev
  12. Beyond lost earnings: The long-term impact of jobdisplacement on workers' commuting behavior By Duan, Yige; Jost, Oskar; Jost, Ramona
  13. COVID-19 pandemic: Lessons for spatial development By Adli, Mazda; Baumgart, Sabine; Beckmann, Klaus J.; Brenner, János; Bolte, Gabriele; Gärtner, Stefan; Hartz, Andrea; Havekost, Carola; Henckel, Dietrich; Köckler, Heike; Kramer, Caroline; Krätzig, Sebastian; Matthes, Gesa; Völker, Sebastian; Winter, Ralf
  14. The mutual specialization of port and urban functions: The case of France By Mounir Amdaoud; César Ducruet; Marc‐antoine Faure
  15. Minimum Wage as a Place-Based Policy: Evidence from US Housing Rental Markets By Gabriele Borg; Diego Gentile Passaro; Santiago Hermo
  16. The German Local Population Database (GPOP), 1871 to 2019 By Felix Roesel

  1. By: Diemer, Andreas; Iammarino, Simona; Rodríguez-Pose, Andrés; Storper, Michael
    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; 0000-0002-5193-7739; 0000-0002-8354-792X and 2018CE16BAT055; T&F deal
    JEL: J1
    Date: 2022–07–14
  2. By: Winters, John V. (Iowa State University)
    Abstract: Place-based attachments are important but often overlooked. Place-based attachments can be beneficial but often harm individuals tied to struggling areas. In this address, I discuss my own education and migration experiences and then more generally discuss sense of belonging as a friction to migration. I also present descriptive statistics related to place-based attachments. Most persons born in the U.S. live in their birth state as adults. Birth-state residence has increased over time, especially among the highly educated. I also present evidence that college graduates who reside in their birth state experience a wage penalty that is increasing over time.
    Keywords: location, place, regions, migration frictions, policy
    JEL: R10 R23 J61
    Date: 2022–07
  3. By: César Ducruet (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); Hidekazu Itoh (Kwansei Gakuin University)
    Abstract: Based on untapped shipping and urban data, this article compares the diffusion of steam and container shipping at the port city level and at the global scale between 1880 and 2008. A temporal and multi-layered network is constructed, including the pre-existing technologies of sailing and breakbulk. The goal is to check the differences a) between innovations and their predecessors and b) between innovations, from an urban network perspective. Main results show that despite certain differences, such as historical context, voyage length, speed of diffusion, and geographical spread, the two innovations share a large quantity of similarities. They both fostered port concentration, were boosted by city size and port connectivity, bypassed upstream port sites, and diverged gradually from older technologies. This research thus contributes to the literature on cities, networks, innovation, and maritime transport.
    Keywords: Containerization,Maritime transport,Port cities,Regional disparity,Spatial networks,Steam shipping,Technological change
    Date: 2022
  4. By: Cinnirella, Francesco (University of Bergamo); Hornung, Eric (University of Cologne); Koschnick, Julius (London School of Economics)
    Abstract: Economic societies emerged during the late eighteenth-century. We argue that these institutions reduced the costs of accessing useful knowledge by adopting, producing, and diffusing new ideas. Combining location information for the universe of 3,300 members across active economic societies in Germany with those of patent holders and World’s Fair exhibitors, we show that regions with more members were more innovative in the late nineteenth-century. This long-lasting effect of societies arguably arose through agglomeration economies and localized knowledge spillovers. To support this claim, we provide evidence suggesting an immediate increase in manufacturing, an earlier establishment of vocational schools, and a higher density of highly skilled mechanical workers by mid-nineteenth century in regions with more members. We also show that regions with members from the same society had higher similarity in patenting, suggesting that social networks facilitated spatial knowledge diffusion and, to some extent, shaped the geography of innovation
    Keywords: Economic Societies ; Useful Knowledge ; Knowledge Diffusion ; Innovation ; Social Networks JEL Classification: N33 ; O33 ; O31 ; O43
    Date: 2022
  5. By: Min Fang; Libin Han; Zibin Huang; Ming Lu; Li Zhang
    Abstract: Place-based land policies may create spatial misallocation. We investigate a major policy in China that aims to reduce regional development gaps by distributing more urban construction land quotas to underdeveloped inland regions. We first show causal evidence that this policy decreased firm-level TFP in more developed eastern regions relative to inland regions. We then build a spatial equilibrium model with migration, land constraints, and agglomeration. The model reveals that this policy led to substantial losses in national TFP and output. It shrinks regional output gap but lowers incomes of workers from underdeveloped regions by hindering their migration to developed regions.
    Keywords: Place-based Policy; Land Policy; Spatial Misallocation; Regional Inequality; China;
    JEL: O18 R58 E24 J61 R52
    Date: 2022–08–22
  6. By: Sebastian Heise; Tommaso Porzio
    Abstract: We develop a frictional labor market model with multiple regions and heterogeneous firms to study how frictions impeding labor mobility across space affect the joint allocation of labor across firms and regions. Bringing the model to matched employer-employee data from Germany, we find that spatial frictions generate large misallocation of labor across firms within regions. By shielding firms from competition for workers from other regions, spatial frictions allow low productivity firms to expand, reducing aggregate productivity. Overall, we show that taking into account the characteristics of the local labor market is important to quantify the aggregate losses from spatial frictions.
    JEL: J6 O1 R1
    Date: 2022–07
  7. By: Berlingieri, Francesco; Gathmann, Christina; Quinckhardt, Matthias
    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.
    Date: 2022
  8. By: Oussama Ben Atta (Université de Pau et des Pays de l'Adour)
    Abstract: This presentation investigates the impact of geographical proximity to universities on educational attainment in Nigeria. I relate individuals' level of schooling obtained from three rounds of the Nigeria Living Standard Measurement Survey (LSMS) to spatial distance too university measured by pairing residential and university campuses, GPS coordinates. To identify the effect of the distance to the university, I exploit the theory of residential sorting to instrument residential proximity to the university. Specifically, I instrument distance to the university drawing on variations in households’ proximity to state boundary posts and neighborhood population density. The instrumental variable estimates show a negative and significant effect of distance, revealing that geographical constraints during teenage years represent a barrier to the subsequent human capital acquisition. Additional results from a difference-in-difference estimation strategy indicate that a large-scale establishment of universities had beneficial trickle-down effects by decreasing the intention to drop out of secondary school, supporting evidence of the role of geographical constraints in the accumulation of human capital in Nigeria.
    Date: 2022–08–01
  9. By: Batabyal, Amitrajeet; Beladi, Hamid
    Abstract: We study the properties of economic growth in a region that is driven by the activities of the so-called creative class. On the consumption side of our regional economy, we focus on an infinitely lived creative class household and on the production side of this same economy, we concentrate on a final good that is produced using creative and physical capital. In this setting, we first define and then characterize a competitive equilibrium for our regional economy. Second, we show that this competitive equilibrium is Pareto optimal. Third, we demonstrate that sustained growth in this regional economy is impossible when the value of a key parameter of the production function is less than or equal to unity. Fourth, we specify the conditions in our model that need to hold for there to be sustained economic growth. Fifth, we study what happens to the share of physical capital in our region’s total income. Finally, we analyze what happens to the asymptotic growth rate of physical capital and consumption when a regional authority taxes the returns from physical capital.
    Keywords: Capital Tax, Creative Class, Economic Growth, Pareto Optimality, Sustained Growth
    JEL: H22 O40 R11
    Date: 2022–06–15
  10. By: Gianluca Monturano; Giuliano Resce; Marco Ventura
    Abstract: This paper investigates the effects on the economic activities location of a specific governmental place-based policy, the Italian Strategy for Inner Areas (SNAI). Taking advantage of the most recent developments in the econometrics of policy evaluation, we apply a staggered difference-in-difference estimator to evaluate the impact of the public policy in terms of number of plants at municipal level. The analysis is made possible thanks to a detailed panel dataset containing information about Italian municipalities over the years 2014-2020. The results show that the policy has produced effects since its inception, generating a significant number of extra plants in the treated municipalities over the first two years. A further key issue is whether the policy has generated spillover effects on neighbours which may (in)validate the results obtained. To answer this question we propose an empirical strategy, joining the new estimator with spatial analysis, and we find no spillover effects
    Keywords: Rural development; Policy evaluation; Place-based policy; Event study analysis; Spillover effects
    JEL: C21 O12 O18
    Date: 2022–08
  11. By: Deyan Radev (Faculty of Economics and Business Administration at Sofia University); Georgi Penev (Bulgarian Fintech Association, Sofia, Bulgaria)
    Abstract: This paper provides insights into the drivers of the resilience of the Fintech sector in Emerging Europe by analyzing the performance of 128 Bulgarian Fintech companies in the period 2000-2021. Our results show that larger and better capitalized Fintech companies which outsource their non-core activities and focus on their main competitive strengths tend to have higher operating income and profit. We also find substantial positive real-economy effects as these companies hire actively on the labor market to maintain their growth. The results are primarily driven by the post-Brexit period of 2016-2019. These results have important managerial and policy implications and provide interesting directions for future research.
    Keywords: Brexit, fintech, regional clusters, resilience, emerging markets
    JEL: G01 R00 R11 P25
    Date: 2022–08
  12. By: Duan, Yige; Jost, Oskar; Jost, Ramona
    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.
    Keywords: commuting,mobility,displacement,job search
    JEL: J3 J6 R23 R41
    Date: 2022
  13. By: Adli, Mazda; Baumgart, Sabine; Beckmann, Klaus J.; Brenner, János; Bolte, Gabriele; Gärtner, Stefan; Hartz, Andrea; Havekost, Carola; Henckel, Dietrich; Köckler, Heike; Kramer, Caroline; Krätzig, Sebastian; Matthes, Gesa; Völker, Sebastian; Winter, Ralf
    Abstract: [Background and aims of this position paper] Since the COVID-19 pandemic began, it has become ever clearer that it poses an enormous challenge for society. The lockdown imposed on large parts of public life, which hit all social groups and institutions relatively abruptly with a wide range of impacts, as well as the measures adopted subsequently have resulted in radical changes in our living conditions. In some cases, the crisis has acted as an accelerator of trends affecting processes that were already ongoing: the digitalisation of communications and educational processes, the growth in working from home and mobile working arrangements, the expansion of online retail, changes in travel behaviour (in favour of cars and bicycles), and the establishment of regional service networks. At the same time, there has been a braking effect on sectors such as long-distance travel, global trade, trade fairs and cultural events, as well as on progress towards gender equality in the division of labour for household responsibilities and childcare. Socio-spatial, infrastructural, economic and ecological effects are becoming increasingly apparent. For those involved in spatial development and spatial planning, urgent questions arise not only about the weaknesses that have become apparent in our spatial uses in terms of infrastructure and public service provision, the economy and ecology, and in our ways of life in terms of housing and the supply of goods and services, but also about what opportunities have emerged for sustainable and self-determined lifestyles. What conclusions for anticipatory and preventive planning can be drawn from these (provisional) findings? Using a critical, multidisciplinary and integrative examination of the spatially-relevant effects of the COVID-19 pandemic, this paper establishes connections between the crisis management of today and crisis preparedness concepts for potential future pandemics. Building on that, it proposes corresponding recommended actions. These actions relate not only to insights for medium-term space-related crisis management but also to conclusions on long-term strategic challenges for spatial development in view of pandemics to be expected in the future. For this position paper, the 'Pandemic and Spatial Development' Ad hoc Working Group at the ARL - Academy for Territorial Development in the Leibniz Association has compiled interdisciplinary perspectives from spatial development and spatial planning, public health services, epidemiology, economics and social sciences, and has condensed them into transdisciplinary recommendations for action. These recommendations are directed at the various action levels for spatial development and spatial planning.
    Date: 2022
  14. By: Mounir Amdaoud (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); César Ducruet (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); Marc‐antoine Faure (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This research examines the similarities between port traffic structure and economic structure of French port cities. Based on the combination of Automated Identification System (AIS) data and employment data, it performs complementary analyses of the mutual specialization between ports and cities. Main results show that while larger cities handle more diversified traffic, the cross-specialization is blurred by the complexity of trade networks and supply chains. We then propose a novel methodology whereby the spatial unit of analysis is enlarged according to the type and volume of port traffic.
    Keywords: hinterland,maritime transport,port city,specialization,supply chain
    Date: 2022
  15. By: Gabriele Borg; Diego Gentile Passaro; Santiago Hermo
    Abstract: The recent rise of sub-national minimum wage (MW) policies in the US has resulted in significant dispersion of MW levels within metropolitan areas. In this paper, we study the effect of MW changes on local housing rental markets exploiting the placed-based nature of MW policies. For each location we define both the log MW where the average resident works (the "workplace MW") and the log MW in the location itself (the "residence MW"). We derive a partial-equilibrium model of a housing market in which MW levels in each location affect housing demand by changing the income of commuters and the prices of non-tradable consumption. The model shows that the workplace MW has a positive effect on rents whereas the residence MW has a negative effect. We construct a ZIP code by month panel using rents data from Zillow, and use a difference-in-differences design to estimate the effect of residence and workplace MW changes on median housing rents. Our baseline results imply that a 10 percent increase in the workplace MW and no change in the residence MW will increase rents by 0.69 percent (SE=0.29). If the residence MW also increases by 10 percent, then rents will increase by 0.47 percent (SE=0.16). We use our results to study the incidence of two counterfactual MW policies: a federal MW increase and a city MW increase. We estimate that landlords pocket 9.2 and 11.0 cents for every dollar increase in worker income in areas affected by these policies. However, the incidence varies systematically across space.
    Date: 2022–08
  16. By: Felix Roesel
    Abstract: I present the first database of historical local population figures for all Germany. The German Local Population Database (GPOP) includes total population in 1871, 1910, 1939, 1946, 1961, 1987, 1996, 2011, and 2019 for the universe of all German municipalities, counties, and states at consistent contemporary boundaries (31 December 2019). The database was hand-collected and assembled from more than 50 sources. The data reflect 150 years of regional development and disparities in Germany. For example, East and West Germany are heavily diverging in population since 1945; and the divide was not reversed but even doubled after reunification.
    Keywords: population, data, history, Germany, GPOP
    JEL: J11 R11 N33 N34
    Date: 2022

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