nep-geo New Economics Papers
on Economic Geography
Issue of 2023‒01‒16
eight papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Level best? The levelling up agenda and UK regional inequality By Fransham, Mark; Herbertson, Max; Pop, Mihaela; Bandeira Morais, Margarida; Lee, Neil
  2. Trade in creative services: relatedness and regional specialization in the UK By Casadei, Patrizia; Vanino, Enrico; Lee, Neil
  3. Climate Change Around the World By Per Krusell; Tony Smith
  4. The role of embeddedness in regional economic resistance By Kitsos, Anastasios; Grabner, Simone Maria; Incera, Andre Carrascal
  5. Unfunded mandates and the economic impact of decentralisation. When finance does not follow function By Rodríguez-Pose, Andrés; Vidal-Bover, Miquel
  6. A Design-Based Approach to Spatial Correlation By Ruonan Xu; Jeffrey M. Wooldridge
  7. Spatial Wage Curves for Formal and Informal Workers in Turkey By Badi H. Baltagi; Yusuf Soner Baskaya
  8. The effects of proximities on the relationship between the degree of decentralization and performance: The example of a French university By Cyril Verdier; Laurent Mériade; Damien Talbot

  1. By: Fransham, Mark; Herbertson, Max; Pop, Mihaela; Bandeira Morais, Margarida; Lee, Neil
    Abstract: ‘Levelling up’ - a policy agenda focused on reducing regional inequalities - has become the new mantra in British politics. This paper critiques the policy programme from its emergence in 2019 to the publication of the 2022 levelling up white paper. While it is a welcome recognition of gross regional inequality, local institutions lack capacity to deliver, there has been little genuine devolution and our analysis shows that little new funding has been committed. “Levelling up” could simply become the latest in a list of politically useful but empty slogans which are used as a substitute for resources and devolution.
    Keywords: levelling up; inequality; regions; cities; funding; policy; ES/V013548/1
    JEL: R10 R11 R12
    Date: 2022–12–08
  2. By: Casadei, Patrizia; Vanino, Enrico; Lee, Neil
    Abstract: Creative services have become an important, but understudied, part of global trade. This paper presents new evidence on the transformation, geography and industrial relatedness of creative service exports in the UK, using the Inquiry in International Trade in Services (ITIS) database. Creative services exports have grown over the past decade, but there are pronounced patterns of geographical specialization in the export of creative and non-creative services. We develop a measure of relatedness between exports of creative and non-creative services and of manufacturing goods. We argue that creative services are economically significant because of their interrelationship with other local sectors.
    Keywords: creative services; trade; exports; services; relatedness; T&F deal
    JEL: R11 F10 R12
    Date: 2022–10–17
  3. By: Per Krusell (Cowles Foundation, Yale University); Tony Smith (Cowles Foundation, Yale University)
    Abstract: The economic effects of climate change vary across both time and space. To study these effects, this paper builds a global economy-climate model featuring a high degree of geographic resolution. Carbon emissions from the use of energy in production increase the Earth's (average) temperature and local, or regional, temperatures respond more or less sensitively to this increase. Each of the approximately 19,000 regions makes optimal consumption-savings and energy-use decisions as its climate (or regional temperature) and, consequently, its productivity change over time. The relationship between regional temperature and regional productivity has an inverted U-shape, calibrated so that the high- resolution model replicates estimates of aggregate global damages from global warming. At the global level, then, the high-resolution model nests standard one-region economy-climate models, while at the same time it features realistic spatial variation in climate and economic activity. The central result is that the effects of climate change vary dramatically across space---with many regions gaining while others lose---and the global average effects, while negative, are dwarfed quantitatively by the differences across space. A tax on carbon increases average (global) welfare, but there is a large disparity of views on it across regions, with both winners and losers. Climate change also leads to large increases in global inequality, across both regions and countries. These findings vary little as capital markets range from closed (autarky) to open (free capital mobility).
    Keywords: climate change, carbon taxes, regional economies
    JEL: H23 Q54 R13
    Date: 2022–07
  4. By: Kitsos, Anastasios; Grabner, Simone Maria; Incera, Andre Carrascal
    Abstract: We study the role of local industrial embeddedness (the share of regional inter-industry economic activity that is anchored to a region) on regional resistance (the difference between pre- and post-crisis employment) to the 2008 Great Recession (GR) in EU and UK NUTS2 regions. The recession had profound effects in regional economies, which showed diverse performance based on their capacity to absorb the shock. The concept of economic resilience has been brought to the center of attention with several contributions exploring its determinants. However, the impact of the embeddedness of local economic systems in terms of sales and supplies has been largely unexplored. We use regional input-output tables to approximate the embeddedness of local economies between and, fixed-effects and quantile regressions to test its relationship to regional resistance between 2008 and 2011. We find that during the GR, regional industries opted to change input rather than output markets. Additionally, embeddedness has a curvilinear relationship to regional resistance which varies across the distribution of regional resistance performance. Finally, at the industry level we find regional embeddedness to be important to the resistance of manufacturing and financial and business services and sectoral embeddedness to matter more for the resistance of construction and wholesale, retail & IT. Our findings highlight nuances that policymakers should be aware of in planning for resilience.
    Date: 2022–12–21
  5. By: Rodríguez-Pose, Andrés; Vidal-Bover, Miquel
    Abstract: Decentralisation has frequently been sold as a means to increase well-being and development. Yet, questions remain as to whether decentralisation improves economic performance. This is possibly because decentralisation processes have often led to “unfunded mandates”, that is a mismatch between the powers transferred to subnational tiers of government and the resources allocated to them. In this paper we analyse how unfunded mandates shape regional economic growth across 518 regions in 30 OECD countries over the period 1997-2018. There is a negative, statistically significant, and robust impact of unfunded mandates on economic growth. This effect is higher in more politically and less fiscally decentralised regions and in regions with a higher level of wealth. Unfunded mandates thus represent a serious drag on the potential positive economic effect of political decentralisation. Hence, for those benefits to materialise, better not more decentralisation —ensuring that finance follows function— should be pursued.
    Keywords: political decentralisation; fiscal decentralisation; unfunded mandates; economic growth; regions; OECD; Sage deal
    JEL: H70 H77 O47
    Date: 2022–11–27
  6. By: Ruonan Xu; Jeffrey M. Wooldridge
    Abstract: When observing spatial data, what standard errors should we report? With the finite population framework, we identify three channels of spatial correlation: sampling scheme, assignment design, and model specification. The Eicker-Huber-White standard error, the cluster-robust standard error, and the spatial heteroskedasticity and autocorrelation consistent standard error are compared under different combinations of the three channels. Then, we provide guidelines for whether standard errors should be adjusted for spatial correlation for both linear and nonlinear estimators. As it turns out, the answer to this question also depends on the magnitude of the sampling probability.
    Date: 2022–11
  7. By: Badi H. Baltagi (Department of Economics and Center for Policy Research, Syracuse University); Yusuf Soner Baskaya (University of Glasgow, Adam Smith Business School)
    Abstract: This paper estimates spatial wage curves for formal and informal workers in Turkey using individual level data from the Turkish Household Labor Force Survey (THLFS) provided by TURKSTAT for the period 2008- 2014. Unlike previous studies on wage curves for formal and informal workers, we extend the analysis to allow for spatial effects. We also consider household characteristics that would affect the selection into formal employment, informal employment, and non-employment. We find that the spatial wage curve relation holds both for formal and informal workers in Turkey for a variety of specifications. In general, the wages of informal workers are more sensitive to the unemployment rates of the same region and other regions than formal workers. We find that accounting for the selection into formal and informal employment affects the magnitudes but not the significance of the spatial wage curves for the formal and informal workers with the latter always being larger in absolute value than that for formal workers.
    Date: 2022–04–20
  8. By: Cyril Verdier (CleRMa - Clermont Recherche Management - ESC Clermont-Ferrand - École Supérieure de Commerce (ESC) - Clermont-Ferrand - UCA - Université Clermont Auvergne, UCA - Université Clermont Auvergne); Laurent Mériade (CleRMa - Clermont Recherche Management - ESC Clermont-Ferrand - École Supérieure de Commerce (ESC) - Clermont-Ferrand - UCA - Université Clermont Auvergne, UCA - Université Clermont Auvergne, S&T - chaire Santé et Territoires); Damien Talbot (CleRMa - Clermont Recherche Management - ESC Clermont-Ferrand - École Supérieure de Commerce (ESC) - Clermont-Ferrand - UCA - Université Clermont Auvergne, UCA - Université Clermont Auvergne)
    Abstract: In France, from 2009 to 2018, nine university mergers were enacted, potentially bringing the actors closer together. These unprecedented management situations raised questions for the leaders of public organizations about how to coordinate these actors to improve performance. The debate focuses, in particular, on the degree of decentralization to be adopted, which we relate in this article to the three dimensions of performance enshrined in the French law "Loi Organique relative aux Lois de Finances"(2001) – socio-economic effectiveness, quality of service and management efficiency –. The objective of this research is then to circumscribe and better define the elements of this relationship from the analytical opportunities offered by the five dimensions of proximity formalized by Boschma (2005) – geographical proximity, organizational proximity, institutional proximity, cognitive proximity and social proximity –. Thus, through a case study of a French university via fourteen semi-directive interviews, our exploratory research draws the contours of a model for analyzing the relationship between the degree of decentralization and the performance of a university based on the heuristic of proximity.
    Abstract: En France, de 2009 à 2018, neuf fusions d'universités ont été promulguées, rendant les acteurs potentiellement plus proches. Ces situations inédites de gestion interrogent les dirigeants d'organisation publique sur la manière de coordonner ces acteurs pour améliorer la performance. Le débat porte notamment sur le degré de décentralisation à adopter, que nous mettons en relation dans cet article avec les trois dimensions de la performance inscrites dans la Loi Organique relative aux Lois de Finances (2001) – efficacité socio-économique, qualité de service, efficience de gestion –. L'objectif de cette recherche est alors de circonscrire et de mieux définir les éléments de cette relation à partir des opportunités analytiques offertes par les cinq dimensions de la proximité formalisées par Boschma (2005) – proximité géographique, proximité organisationnelle, proximité institutionnelle, proximité cognitive, proximité sociale –. Ainsi, à travers une étude de cas d'une université française via quatorze entretiens semi-directifs, notre recherche exploratoire dessine les contours d'un modèle d'analyse de la relation entre le degré de décentralisation et la performance d'une université à partir de l'heuristique des proximités.
    Keywords: Proximity,(De)centralization,Performance,University,Management control,Proximités,(Dé)centralisation,Université,Contrôle de gestion
    Date: 2022

This nep-geo issue is ©2023 by Andreas Koch. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.