nep-geo New Economics Papers
on Economic Geography
Issue of 2022‒10‒03
seven papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. The Effect of Working from Home on the Agglomeration Economies of Cities: Evidence from Advertised Wages By Liu, Sitian; Su, Yichen
  2. Politically connected cities: Italy 1951-1991 By Guglielmo Barone; Guido de Blasio; Elena Gentili
  3. Place-Based Productivity and Costs in Science By Jonathan Gruber; Simon Johnson; Enrico Moretti
  4. Propagation and Amplification of Local Productivity Spillovers By Xavier Giroud; Simone Lenzu; Quinn Maingi; Holger Mueller
  5. Rethinking regional economic resilience: Preconditions and processes shaping transformative resilience By Michaela Trippl; Sebastian Fastenrath; Arne Isaksen
  6. Inland cities, maritime gateways and international trade By César Ducruet; David Guerrero
  7. Splitting up or dancing together? Local institutional structure and the performance of urban areas By Marco Di Cataldo; Licia Ferranna; Margherita Gerolimetto; Stefano Magrini

  1. 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 an 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 much smaller 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 that 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: 2022–09–01
  2. By: Guglielmo Barone; Guido de Blasio; Elena Gentili
    Abstract: The paper estimates the political connection premium for Italian cities tracked during the second half of the 1900s, when the role of the state in the economy was very widespread. It leverages the peculiar features of the gridlocked political landscape in place between the end of World War II and the fall of the Berlin wall, during which most influential politicians remained in charge for a very long time. We focus on population, a well-celebrated proxy of local development in the long run, and compare connected cities - small areas surrounding birthplaces of both prime ministers and leaders of the parties in power - with unconnected municipalities that show, thanks to a propensity score matching procedure, very similar baseline characteristics, including lagged outcome. Our results indicate that politically connected cities gained a population premium of 7.4% between 1951 and 1991. When the connection ends, the difference in growth rate fades away. We also document that birthplaces of powerful politicians benefit from infrastructure investments, other ordinary and special-purpose public expenditures, and the location of plants by state-owned enterprises. The political connection favors industrialization, and raises employment and wages, but crowds out private entrepreneurship. The paper also illustrates that local communities repay the benefits gained through voting. Finally, it turns out that agglomeration economies in treated municipalities were not higher, thus suggesting that, if anything, place-based interventions linked to political connections have not been output-enhancing from a nationwide point of view.
    JEL: H50 R11 R12
    Date: 2022–09
  3. By: Jonathan Gruber; Simon Johnson; Enrico Moretti
    Abstract: Cities with a larger concentration of scientists have been shown to be more productive places for additional scientists to do Research and Development. At the same time, these urban areas tend to be associated with higher costs of doing research, in terms of both wages and land. While the literature on the benefits of agglomeration economies is extensive, it offers no direct evidence of how productivity gains from agglomeration compare with higher costs of production. This paper aims to shed light on the balance between local productivity and local costs in science. Using a novel dataset, we estimate place-based costs of carrying out R&D in each US metro area and assess how these place-based costs vary with the density of scientists in each area. We then compare these costs with estimates of the corresponding productivity benefits of more scientist density from Moretti (2021). Adding more scientists to a city increases both productivity and production costs, but the rise in productivity is larger than the rise in production costs. In particular, each 10% rise in the stock of scientists is associated with a 0.11% rise in costs and a 0.67% rise in productivity. This implies that firms moving from cities with a small agglomeration of scientists to cities with a large agglomeration of scientists experience productivity gains that are 6 times larger than the increase in production costs. This finding is consistent with the increased concentration of R&D activity observed over the past 30 years. However, while the productivity estimate has only modest non-linearities, the cost estimates suggest much larger non-linearities as the concentration of scientists increases. For the most concentrated R&D cities, the difference between productivity gains and cost increases is close to zero.
    JEL: H0 J0 R0
    Date: 2022–09
  4. By: Xavier Giroud; Simone Lenzu; Quinn Maingi; Holger Mueller
    Abstract: This paper shows that local productivity spillovers can propagate throughout the economy through the plant-level networks of multi-region firms. Using confidential Census plant-level data, we find that large manufacturing plant openings not only raise the productivity of local plants but also of distant plants hundreds of miles away, which belong to multi-region firms that are exposed to the local productivity spillover through one of their plants. To quantify the significance of plant-level networks for the propagation and amplification of local productivity shocks, we develop and estimate a quantitative spatial model in which plants of multi-region firms are linked through shared knowledge. Counterfactual exercises show that while knowledge sharing through plant-level networks amplifies the aggregate effects of local productivity shocks, it can widen economic disparities between workers and regions in the economy.
    Date: 2022–08
  5. By: Michaela Trippl (University of Vienna); Sebastian Fastenrath (University of Vienna); Arne Isaksen (University of Agder)
    Abstract: The unpredictable impacts of slow-burn processes such as climate change and sudden shocks such as the current COVID-19 crisis have led to a renewed interest into regional economic resilience. Much of the literature focuses attention on how regional economies and industries could bounce back, that is, how they could return to their pre-shock conditions. Other scholars have proposed to construe resilience as bouncing forward to capture the mechanisms and processes that underpin positive adaptation and structural change in response to a crisis. In this article, we argue that both conceptualisations fail to consider shocks and crises as a window of opportunity for regional economies to transform to a radically different and more desirable trajectory. This paper brings a new perspective into play, that is, transformative resilience which places shifts towards more sustainable pathways centre stage. This understanding of regional economic resilience acknowledges that a crisis may bring about permanent structural change and it considers to what extent these transformations are to the benefit of society and the environment. This article seeks to identify in a conceptual way what factors and dynamics are vital for enhancing the transformative resilience of regions. To this end, we link recent insights from the debate on regional economic resilience to challenge-oriented regional innovation systems and elaborate on the role of pre-shock conditions and various core processes in building up regional transformative resilience.
    Keywords: transformative regional resilience, environmental and societal challenges, challenge-oriented regional innovation systems; green path development
    Date: 2022
  6. By: César Ducruet (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); David Guerrero (AME-SPLOTT - Systèmes Productifs, Logistique, Organisation des Transports et Travail - Université Gustave Eiffel)
    Abstract: This research focuses on the relationships between inland cities and port gateways. A quantitative analysis of 64 inland capital cities situated in coastal countries is proposed based on indicators that relate to ports, transport, trade and urban factors. The identified trends suggest that there is a trade-off between remoteness and openness to trade which leads us to postulate the existence of three typologies of inland cities: major logistics hubs, constrained metropolises and underdeveloped corridors. We conduct a more quantitative review of y intermodalism and port choice issues with reference to via a selection of six case studies. The observed spatial configurations have implications for logistics and governance.
    Date: 2022
  7. By: Marco Di Cataldo (Department of Economics, University Of Venice CÃ Foscari; Department of Geography and Environment, London School of Economics); Licia Ferranna (Department of Economics, University Of Venice CÃ Foscari); Margherita Gerolimetto (Department of Economics, University Of Venice CÃ Foscari); Stefano Magrini (Department of Economics, University Of Venice CÃ Foscari)
    Abstract: This paper analyses institutional changes in local governance structures as determinants of wage premia and innovation capacity of urban areas. By combining individual and metropolitan area data for the US, we study the role of institutional fragmentation related to the number of local governments operating in an area, and institutional coordination, stemming from the creation of authorities fostering the collaboration of local governments. Our findings suggest that more fragmented institutional landmarks do not benefit the wage competitiveness and innovativeness of urban areas. If anything, they harm them. Conversely, stronger coordination among local governments boosts the productivity of functional regions by increasing their wage premia and improving their capacity to innovate. Coordination agreements between different counties or municipalities are especially relevant in the case of urban areas modifying their functional borders over time. These findings provide key insights into the economic effects of reforming the governance structure of metropolitan areas.
    Keywords: local governance, US MSAs, fragmentation, coordination, wage premium, innovation
    JEL: H70 R12 R23 J3
    Date: 2022

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