nep-geo New Economics Papers
on Economic Geography
Issue of 2022‒10‒31
eleven papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Spatial Structural Change By Fabian Eckert; Michael Peters
  2. Urban-Biased Growth: A Macroeconomic Analysis By Fabian Eckert; Sharat Ganapati; Conor Walsh
  3. Skill shortages and industry clusters – Empirical evidence from German establishment data By tobias König; thomas Brenner
  4. Spatial frictions in consumption and retail competition By Frédéric Kluser, Tobias Seidel, Maximilian v. Ehrlich
  5. Spatial Development and Mobility Frictions in Latin America : Theory-Based Empirical Evidence By Conte,Bruno; Ianchovichina,Elena
  6. Trade, Transport, and Territorial Development By Dasgupta,Kunal; Grover,Arti Goswami
  7. Convergence Heterogeneity at the Local Level in Sub-Saharan Africa By Charpe, Matthieu
  8. Tradable Jobs and Local Labour Market in sub-Saharan Africa By Charpe, Matthieu
  9. The work-from-home revolution and the performance of cities By Stephen Bond-Smith; Philip McCann
  10. Regional Institutional Quality and Territorial Equity in LTC Provision By Marenzi, A.;; Rizzi, D.;; Zanette, M.;; Zantomio, F.;
  11. Proxying Economic Activity with Daytime Satellite Imagery: Filling Data Gaps across Time and Space By Lehnert, Patrick; Niederberger, Michael; Backes-Gellner, Uschi; Bettinger, Eric

  1. By: Fabian Eckert; Michael Peters
    Abstract: Between 1880 and 1920, the US agricultural employment share fell from 50% to 25%. However, despite aggregate demand shifting away from their sector of specialization, rural labor markets saw faster wage growth and industrialization than non-agricultural parts of the US. We propose a spatial model of the structural transformation to analyze the link between aggregate structural change and local economic development. The calibrated model shows that rural areas adapted to the decline of the agricultural sector by adopting technologies already in use in urban locations. Without such catchup growth, economic development would have been urban-biased and spatial inequality would have increased.
    JEL: O1 R11
    Date: 2022–09
  2. By: Fabian Eckert; Sharat Ganapati; Conor Walsh
    Abstract: Since 1980, US wage growth has been fastest in large cities. Empirically, we show that most of this urban-biased growth reflects wage growth at large Business Services firms, which are also the most intensive users of information and communications technology (ICT) capital in the US economy. We provide an explicit economic mechanism whereby ICT is more complementary with labor at larger firms. Quantitatively, we find that with such a complementarity, the observed decline in ICT prices alone can account for most of the urban-biased growth, since Business Services firms in big cities tend to be large.
    JEL: J3 O33 R11 R12
    Date: 2022–09
  3. By: tobias König; thomas Brenner
    Abstract: Regional and sector-specific skill shortages are either foreseeable or a reality in Germany. It is unclear whether shortages of skilled workers are more apparent in industry-specific agglomerations due to competitive labor poaching or less apparent benefitting labor pooling. This paper analyses the association of skill shortages and the level of industrial clustering in Germany. The results show, that firms located in an industrial cluster have a significantly lower chance of experiencing skill shortages in terms of vacancies for qualified jobs. At the same time, if firms located in industrial clusters face skill shortage, they struggle more to fill such vacancies.
    Keywords: Skill shortage, cluster, location quotient, Establishment panel data
    JEL: J23 J63 R10
    Date: 2022–09–29
  4. By: Frédéric Kluser, Tobias Seidel, Maximilian v. Ehrlich
    Abstract: In this paper, we empirically quantify spatial consumption frictions and the degree of local retail competition. We exploit a unique data set including 1.5 billion daily transactions in combination with detailed characteristics of more than 3 million households. Our estimates are based on a quasi-experimental approach to estimate the causal effect of store openings. We find that a same-chain store opening in the proximity of households' residences reduces their expenditures at incumbent stores by 30% in the first month. Smaller effects for competitors suggest imperfect substitutability between retail chains. Exploiting more than 350 openings, we identify causal consumption gravity functions, which allow us to quantify spatial consumption areas. We document significant heterogeneities across regions and socio-demographic groups, indicating substantial inequalities in consumption access.
    Keywords: economic geography, consumption, consumption access, consumption inequality, spatial competition
    JEL: R1 R2 L14
    Date: 2022–09
  5. By: Conte,Bruno; Ianchovichina,Elena
    Abstract: Using fine-grained spatial data and a dynamic spatial general equilibrium model, this paperassesses the magnitude of mobility frictions in Latin America as well as the effects of their reduction on spatialdevelopment in the region. The results suggest that in most Latin American countries, migration frictions calibratedbased on spatially differentiated initial utility are on average smaller and less dispersed than those obtainedassuming uniform within-country initial utility. A reduction in trade costs due to optimal investments in roadinfrastructure in most Latin American countries increases the present discounted value of real per capita income onaverage in the region by 15.1 percent. This effect is larger than the effects obtained with static quantitative trademodels because of substantial dynamic gains. By contrast, a reduction in migration entry costs in the most productiveand more populous locations in the Latin American countries has a negligible effect on the present discounted value ofthe region’s real per capita income, reflecting the relatively small dispersion in domestic migration frictionsand their relatively low levels in top locations. In both counterfactuals, the welfare increases are significantlylarger than the increases in real per capita output because the reductions in mobility frictions allow people torelocate to areas with better amenities and therefore derive higher utility. These results suggest that trade costs, notmigration barriers, represent a major constraint to theefficient spatial distribution of economic activity and growth in Latin America.
    Date: 2022–05–31
  6. By: Dasgupta,Kunal; Grover,Arti Goswami
    Abstract: The spatial distribution of economic activity is known to depend on trade costs, bothinternational and domestic. This paper examines the interplay between these external and internal trade costsusing a model of trade and production that is tested with the organized manufacturing sector data for India from 1989to 2009. The analysis establishes that the trade liberalization episode of the early 1990s helped spreadmanufacturing away from the primary region (districts closest to ports) to the secondary region between 1994 and2000. Such dispersion of activity away from the primary to the secondary region was driven by high internal trade coststhat insulated manufacturers from import competition. This trend reversed post-2000, a period of massive decline ininternal trade costs, attributed to the Golden Quadrilateral highway upgrades. During this period, the districts alongthe highway network in the secondary region gained market access and manufacturing activity, while those off thenetwork lost. Irrespective of the period, or the nature of trade costs, manufacturing activity in the interior region(districts farthest from ports) remained depressed, thereby emphasizing the importance of complementary conditions indriving territorial development.
    Date: 2022–05–25
  7. By: Charpe, Matthieu
    Abstract: This paper tests for convergence in labor productivity at the local level in 10 Sub-Saharan countries, disaggregated into 1136 administrative entities. This work combines nighttime lights data and a unique set of population censuses to produce local measures of growth, employment and sectoral shares. We find evidence of unconditional convergence across sectors in the range of 2\%. However, convergence is heterogeneous and conditional on both manufacturing and services employment shares. Convergence is also associated with proximity to the main city, moderate population density, low land suitability and relatively moderate temperature. Lastly, the within effect dominates the between effect.
    Keywords: Local convergence, nighttime lights, heterogeneity, local labour market, structural transformation, census
    JEL: J23 J46 O14 R11 R23
    Date: 2022–06–08
  8. By: Charpe, Matthieu
    Abstract: This paper measures the impact of attracting tradable jobs on nontradable jobs at the local level in sub-Saharan countries. Applying the local multiplier approach to 10 medium and low-income countries disaggregated into 1441 administrative entities, we show that the multipliers are 3 to 5 times larger than in high-income countries. The multipliers also increase with the employment status and the skills of the tradable jobs created, highlighting the importance of the consumption of locally produced goods. This points to the importance of manufacturing for economic development and structural transformation. The paper also suggests a modification of the usual shift-share instrumental variable in countries characterized by sectoral diversification/unconditional convergence. Lastly, we show that the multipliers maybe be impacted by the size of administrative entities.
    Keywords: Local multiplier, tradable, nontradable, local labour market, structural transformation
    JEL: J23 J46 O14 R11 R22
    Date: 2022–10–03
  9. By: Stephen Bond-Smith (University of Hawai'i, Economic Research Organization); Philip McCann (The University of Manchester, The Productivity Institute)
    Keywords: Working-from-home, agglomeration economies
    JEL: R1
    Date: 2022–09
  10. By: Marenzi, A.;; Rizzi, D.;; Zanette, M.;; Zantomio, F.;
    Abstract: We show how regional governments affect the appropriate – in terms of territorial equity - assignment of a national LTC benefit. We analyse a three-layers setting, where eligibility criteria are defined by the central government (which bears the fiscal cost of transfers) but the assignment decision is taken by regional medical commissions, while applications are activated by individual potential beneficiaries. Combining administrative and survey data, and accounting for regional variation in eligibility prevalence, we document large territorial disparities in needadjusted benefit assignment. We investigate the determinants of such disparities both in terms of individuals’ differential propensity to claim, and of regional discretionary behaviour, as shaped by the underlying quality of regional institutions. Regional discretion appears to play a major role, with local institutional quality accounting for about one fifth of explained variation in needadjusted benefit coverage. Lower regional institutional quality results in more opportunistic benefit adjudication decisions, although the relationship is attenuated in highly deprived areas.
    Keywords: territorial equity; regional discretion; multi-level government; institutional quality; long-term care; benefit targeting;
    JEL: C13 H11 H53 H75 J14
    Date: 2022–10
  11. By: Lehnert, Patrick (University of Zurich); Niederberger, Michael (University of Zurich); Backes-Gellner, Uschi (University of Zurich); Bettinger, Eric (Stanford University)
    Abstract: This paper develops a novel procedure for proxying economic activity with day-time satellite imagery across time periods and spatial units, for which reliable data on economic activity are otherwise not available. In developing this unique proxy, we apply machine-learning techniques to a historical time series of daytime satellite imagery dating back to 1984. Compared to satellite data on night light intensity, another common economic proxy, our proxy more precisely predicts economic activity at smaller regional levels and over longer time horizons. We demonstrate our measure's usefulness for the example of Germany, where East German data on economic activity are unavailable for detailed regional levels and historical time series. Our procedure is generalizable to any region in the world, and it has great potential for analyzing historical economic developments, evaluating local policy reforms, and controlling for economic activity at highly disaggregated regional levels in econometric applications.
    Keywords: daytime satellite imagery, Landsat, machine learning, economic activity, land cover
    JEL: E01 E23 O18 R11 R14
    Date: 2022–09

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