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

  1. The work-from-home revolution and the performance of cities By Steven Bond-Smith; Philip McCann
  2. Transforming Regional Knowledge Bases: A Network and Machine Learning Approach to Link Entrepreneurial Experimentation and Regional Absorptive Capacity By Jessica Birkholz
  3. The Geography of Job Tasks By Enghin Atalay; Sebastian Sotelo; Daniel I. Tannenbaum
  4. Persistence of Regional Entrepreneurship Patterns: Quantity and Quality of Regional Business Opportunity Perception By Jessica Birkholz
  5. Financial development, institutions, and economic growth nexus: A spatial econometrics analysis using geographical and institutional proximities. By Ahmad, Mahyudin; Siong Hook, Law
  6. Perks and Pitfalls of City Directories as a Micro-Geographic Data Source By Albers, Thilo N. H.; Kappner, Kalle
  7. The impact of a rise in transportation costs on firm performance and behaviour By Catarina Branco; Dirk C. Dohse; João Pereira Santos; José Tavares
  8. European funds and firm performance: Evidence from a natural experiment By Gabriel, José Mesquita; dos Santos, João Pereira; Tavares, José
  9. Fiscal Policy, public investment, and structural change:A P-SVAR analysis on Italian regions By Francesco Zezza; Dario Guarascio
  10. Evidence and Strategy on Economic Distance in Spatially Augmented Solow-Swan Growth Model By Jieun Lee
  11. The Radius of Economic Opportunity: Evidence from Migration and Local Labor Markets By Ben Sprung-Keyser; Nathaniel Hendren; Sonya Porter
  12. Tax Elasticity of Border Sales: A Meta-Analysis By Huynh, Dat; Sokolova, Anna; Tosun, Mehmet S.
  13. Dual-Earner Migration Decisions, Earnings, and Unemployment Insurance By Joanna Venator

  1. By: Steven Bond-Smith (UHERO, University of Hawai'i at Manoa); Philip McCann (University of Manchester, Alliance Manchester Business School; The Productivity Institute, Manchester, United Kingdom)
    Abstract: In this paper we set out the relationships between the behavioural, technological and spatial changes in systems that allow for heterogeneous responses to working-from-home by different types of actors, and also identifies the channels via which such changes take place. Unlike all other papers on the subject, the analytical framework we propose centers explicitly on the role of frequency of commuting. In particular, we find that the optimal frequency of commuting is positively related to the opportunity costs of less-than-continuous face-to-face interaction and inversely related to the travel plus travel-time costs. The results also support recent empirical findings of a “donut effect†with greater growth in the suburbs and hinterlands around large cities, but also capture inter-city effects for the first time. Counterintuitively, the reduction in the frequency of commuting makes larger cities and their hinterlands more desirable places, in spite of longer commuting distances. Taken together, our results imply enhanced productivity of larger cities over smaller cities.
    Keywords: Working-from-home, agglomeration economies
    JEL: R1
    Date: 2022–09
  2. By: Jessica Birkholz
    Abstract: This study explores the regional innovation system characteristics that build the basis for the regional absorptive capacity of entrepreneurial knowledge. Regionalized patent data is combined with firm level and regional information for German regions over the period 1995 until 2015. Network analysis is applied to identify regional innovation system characteristics on three different layers: 1) cooperation between incumbent firms, 2) learning regimes, and 3) the technological knowledge base. Random forest analyses on basis of conditional inference classification trees are used to identify the most important characteristics for the regional absorption of entrepreneurial knowledge in general and on different efficiency levels. It is shown that characteristics on all three layers impact the regional absorption of entrepreneurial knowledge. Further, the direction and magnitude of the effect regional innovation system characteristics have on the regional knowledge absorption vary across different levels of absorption rates. It is concluded that for a successful implementation of policies to increase the impact of entrepreneurial knowledge on regional development, the regional innovation system needs to be monitored and adapted continuously.
    Keywords: Entrepreneurship, Regional absorptive capacity, Smart specialization
    JEL: L26 O33 D85
    Date: 2022–04
  3. By: Enghin Atalay; Sebastian Sotelo; Daniel I. Tannenbaum
    Abstract: We introduce new measurement tools to understand the sources of earnings differences across space. Based on the natural language employers use in job vacancy text, we develop granular measures of job tasks and of worker specialization. We find that jobs in larger commuting zones involve greater interpersonal interactions and have higher computer software requirements. Between 10 and 50 percent of task and technology variation between large and small commuting zones exists within occupations. Further, workers in larger markets are more specialized within occupations. Tasks, technologies, and worker specialization account for a substantial portion of the market size premium even within occupations.
    JEL: J20 J24 R12 R23
    Date: 2022–09
  4. By: Jessica Birkholz
    Abstract: The recognition of regional business opportunities is the crucial starting point of the entrepreneurial process that governs the persistence of regional entrepreneurship patterns. This persistence depends on the quantity of perceived opportunities and the quality of opportunities perceived by regional inhabitants. However, it is unclear which region-individual interactions relate to the quantity regional business opportunity perception and how long-standing regional entrepreneurship patterns are reflected in conceptions of entrepreneurship that govern the quality of perceived opportunities. A primary data collection in German regions with distinct long-standing entrepreneurship patterns assessed two main aspects. First, the regional embeddedness of respondents on four levels - actor, network, environmental, and cultural - is set in relation to the likelihood of opportunity perception. Second, an implicit measurement of mental representations of entrepreneurship is examined. The mental representations of entrepreneurship, reflecting the conceptions of entrepreneurship, are investigated to identify differences between the conceptions of entrepreneurship that come along with the long-standing regional entrepreneurship patterns and to detect differences between opportunity-perceivers and non-perceivers. The results suggest that regions reinforce long-standing entrepreneurship patterns with distinct individual-region relations that impact the quantity of perceived regional opportunities and distinct conceptualizations of entrepreneurship that shape the quality of perceived opportunities. Differences are observed for the perception of opportunities that are characterized by innovativeness versus those that are general in nature, showing that innovative opportunity perception is less dependent on the regional context than general opportunity perception.
    Keywords: Entrepreneurship; Opportunity Perception; Regional innovation system
    JEL: D91 L26 O33 R11
    Date: 2022–04
  5. By: Ahmad, Mahyudin; Siong Hook, Law
    Abstract: This paper investigates the nexus between financial development (FD), institutions, and economic growth by employing a spatial autoregressive model on a panel dataset covering 82 countries from 1990 to 2019. The spatial dependence between countries is measured via geographical and institutional proximities, the latter hitherto has rarely been explored in the finance-growth literature. Institutional proximity concept postulates that institutionally similar countries are expected to have similar level of economic growth and greater size of spillover once the spatial effects of FD and institutional quality are controlled for. Overall, the findings give empirical support to the above proposition, as FD and political institutions are shown to have significant positive effects on growth. In the case of FD, its growth-effect is beneficial up to a certain threshold beyond which it becomes negative. The results also find significant positive spatial lag growth term in the model indicating the presence of indirect spillover effects of FD and institutions onto the growth of neighbouring countries, both in geographical institutional spheres. Furthermore, the spatial growth model with institutional proximity matrix is shown to have higher rate of convergence and greater size of spillover than the model with geographical proximity. These findings are robust to various model specifications, and the paper concludes with some policy recommendations.
    Keywords: Economic growth, financial development, institutional proximity, spatial fixed effects, spatial lag model.
    JEL: C31 O16 O43
    Date: 2022–09–07
  6. By: Albers, Thilo N. H. (HU Berlin); Kappner, Kalle (HU Berlin)
    Abstract: Historical city directories are rich sources of micro-geographic data. They provide information on the location of households and firms and their occupations and industries, respectively. We develop a generic algorithmic work flow that converts scans of them into geo- and status-referenced household- level data sets. Applying the work flow to our case study, the Berlin 1880 directory, adds idiosyncratic challenges that should make automation less attractive. Yet, employing an administrative benchmark data set on household counts, incomes, and income distributions across more than 200 census tracts, we show that semi-automatic referencing yields results very similar to those from labour-intensive manual referencing. Finally, we discuss potential applications in economic history and beyond.
    Keywords: city directories; data extraction; granular spatial data;
    Date: 2022–01–29
  7. By: Catarina Branco; Dirk C. Dohse; João Pereira Santos; José Tavares
    Abstract: This paper uses micro-level data encompassing the universe of Portuguese private firms for the period 2006-2016 to analyse the effect of the introduction of tolls on previously toll-free highways. To establish causality, we rely on a natural experiment which resulted from Portuguese authorities being forced to in- crease these transportation costs in some highways during the sovereign debt crisis. Difference-in-differences results show a 10.7% decrease of turnover in firms located in affected municipalities vis-Ã -vis firms in the remaining areas, on average. Firm profits were also severely hit and reduced by more than 15%. Both sales and purchases to/from the internal market and abroad (especially to/from EU countries) were affected. Furthermore, employment reduced 2% in treated areas. Importantly, our findings do not uncover induced inter-regional firm migration, suggesting that the tolls have induced a substantial net loss to the Portuguese economy.
    Keywords: Road tolls, Turnover, Expenses, Value Added, Exports, Imports, Competitiveness, Portugal
    JEL: R48 L25 R12
    Date: 2022–09
  8. By: Gabriel, José Mesquita; dos Santos, João Pereira; Tavares, José
    Abstract: Expanding regional eligibility in the access to grants can have important consequences for the performance of firms. We examine a quasi-natural experiment that consisted of a redrawing of administrative areas intended to increase accessibility to European Union (EU) funds using a rich administrative dataset that covers the universe of Portuguese private firms between 2003 and 2010. Our results uncover a positive causal impact of increased eligibility on firms' sales. In contrast, employment and labour productivity do not seem to be significantly impacted by the reform. The effects are heterogeneous: while sales of firms in the services and non-tradable sectors are positively impacted, sales of firms in more competitive sectors are not affected.
    Keywords: Grants,regional policy,private firm,municipalities,Portugal
    JEL: C21 R10
    Date: 2022
  9. By: Francesco Zezza; Dario Guarascio
    Abstract: This work analyses the regional impact of public investments focusing on three domains that are key for the Italian National Recovery and Resilience Plan (NRRP): green, digital and education/knowledge. Relying on a unique database ('Conti Pubblici Territoriali'), we perform a P-SVAR model showing that fiscal policy shocks have positive and long-lasting effects on GDP and private investments. A relevant heterogeneity is detected, though. In particular, shocks to digital spending only timidly crowd-in private investment while a stronger effect is found concerning the green sector. Second, public investments have a significant impact on regions' ‘structural upgrading’, i.e., export competitiveness and share of high-tech manufacturing. Third, confirming previous findings, shocks to public spending are found to have larger effects in centre-north regions, in terms of both GDP and private investments. Nevertheless, public spending turns out to have a stronger structural effect in the south than in the centre-north, highlighting the relevant role that the NRRP may play in reducing the Italian north-south divide
    Keywords: Fiscal multipliers; Panel SVAR; Italian regions; North-South divide
    JEL: C33 E62 H70 R58
    Date: 2022–09
  10. By: Jieun Lee
    Abstract: Economists' interests in growth theory have a very long history (Harrod, 1939; Domar, 1946; Solow, 1956; Swan 1956; Mankiw, Romer, and Weil, 1992). Recently, starting from the neoclassical growth model, Ertur and Koch (2007) developed the spatially augmented Solow-Swan growth model with the exogenous spatial weights matrices ($W$). While the exogenous $W$ assumption could be true only with the geographical/physical distance, it may not be true when economic/social distances play a role. Using Penn World Table version 7.1, which covers year 1960-2010, I conducted the robust Rao's score test (Bera, Dogan, and Taspinar, 2018) to determine if $W$ is endogeonus and used the maximum likelihood estimation (Qu and Lee, 2015). The key finding is that the significance and positive effects of physical capital externalities and spatial externalities (technological interdependence) in Ertur and Koch (2007) were no longer found with the exogenous $W$, but still they were with the endogenous $W$ models. I also found an empirical strategy on which economic distance to use when the data recently has been under heavy shocks of the worldwide financial crises during year 1996-2010.
    Date: 2022–09
  11. By: Ben Sprung-Keyser; Nathaniel Hendren; Sonya Porter
    Abstract: We examine the geographic incidence of local labor market growth across locations of childhood residence. We ask: when wages grow in a given US labor market, do the benefits flow to individuals growing up in nearby or distant locations? We begin by constructing new statistics on migration rates across labor markets between childhood and young adulthood. This migration matrix shows 80% of young adults migrate less than 100 miles from where they grew up. 90% migrate less than 500 miles. Migration distances are shorter for Black and Hispanic individuals and for those from low income families. These migration patterns provide information on the first order geographic incidence of local wage growth. Next, we explore the responsiveness of location choices to economic shocks. Using geographic variation induced by the recovery from the Great Recession, we estimate the elasticity of migration with respect to increases in local labor market wage growth. We develop and implement a novel test for validating whether our identifying wage variation is driven by changes in labor market opportunities rather than changes in worker composition due to sorting. We find that higher wages lead to increased in-migration, decreased out-migration and a partial capitalization of wage increases into local prices. Our results imply that for a 2 rank point increase in annual wages (approximately $1600) in a given commuting zone (CZ), approximately 99% of wage gains flow to those who would have resided in the CZ in the absence of the wage change. The geographically concentrated nature of most migration and the small magnitude of these migration elasticities suggest that the incidence of labor market conditions across childhood residences is highly local. For many individuals, the “radius of economic opportunity” is quite narrow.
    Date: 2022–07
  12. By: Huynh, Dat (University of Nevada, Reno); Sokolova, Anna (University of Nevada, Reno); Tosun, Mehmet S. (University of Nevada, Reno)
    Abstract: When regions in close proximity have different tax rates, residents may engage in cross-border shopping and take advantage of tax differentials. The extent of this activity can be captured by the tax elasticity of border sales (TEBS). We collect 749 estimates of TEBS reported in 60 studies, and conduct the first meta-analysis of this literature. We show that the literature is prone to selective reporting: positive estimates of TEBS are systematically discarded—this biases the mean reported estimate away from the 'true' underlying effect. Reported estimates also vary widely; we construct 29 control variables that capture empirical strategies used to obtain them, and employ Bayesian Model Averaging to pin down the sources of this variation. We find that sales of food, retail and fuel are more elastic compared to sales of tobacco and other individual 'sin' products; that while the cross-border shopping is prominent in the US, it is much less prevalent in Europe and other countries.
    Keywords: cross-border shopping, taxation, tax elasticity, meta-analysis, Bayesian Model Averaging
    JEL: H71 H73 H26 H22 R12 H31
    Date: 2022–08
  13. By: Joanna Venator (Boston College)
    Abstract: Dual-earner couples’ decisions of where to live and work often result in one spouse – the trailing spouse – experiencing earnings losses at the time of a move. This paper examines how married couples’ migration decisions differentially impact men’s and women’s earnings and the role that policy can play in improving post-move outcomes for trailing spouses. I use panel data from the NLSY97 and a generalized difference- in-differences design to show that access to unemployment insurance (UI) for trailing spouses increases long-distance migration rates by 1.9–2.3 percentage points (38–46%) for married couples. I find that women are the primary beneficiaries of this policy, with higher UI uptake following a move and higher annual earnings of $4,500–$12,000 three years post-move. I then build and estimate a structural model of dual-earner couples’ migration decisions to evaluate the effects of a series of counterfactual policies. I show that increasing the likelihood of joint distant offers substantively increases migration rates, increases women’s post-move employment rates, and improves both men and women’s earnings growth at the time of a move. However, unconditional subsidies for migration that are not linked to having an offer in hand at the time of the move reduce post-move earnings for both men and women, with stronger effects for women.
    Keywords: unemployment insurance, migration, economic geography, household behavior and family economics
    JEL: D1 J1 J16 J61 J65 R5
    Date: 2022–09–14

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