nep-geo New Economics Papers
on Economic Geography
Issue of 2023‒02‒06
five papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. How do mass lay-offs affect regional economies? By Wessel Vermeulen; Nils Braakmann
  2. Who stays and who leaves? Immigration and the selection of natives across locations By Javier Ortega; Gregory Verdugo
  3. Aggregation Bias and Input-Output Regionalization By Randall Jackson; Caroline Welter; Gary Cornwall
  4. "Satellite-Based Vehicle Flow Data to Assess Local Economic Activities" By Eugenia Go; Kentaro Nakajima; Yasuyuki Sawada; Kiyoshi Taniguchi
  5. The Regional Keynesian Cross By Marco Bellifemine; Adrien Couturier; Rustam Jamilov

  1. By: Wessel Vermeulen; Nils Braakmann (Newcastle University Business School)
    Abstract: Mass lay-offs from firms and plant restructuring occur regularly and can have potentially large consequences on places and communities. Policy makers may consider supporting firms, in order to prevent mass lay-offs but at the risk of interfering with economic dynamism, or targeting affected workers, to help them transition to new employment. Which strategy (firms versus workers) is the most appropriate and under which circumstances can be informed by better understanding the nature of the economic impact from mass lay-offs. This paper estimates the impact of mass lay-offs between 2008-18 across small regions (TL3) in Europe on regional employment and productivity. It finds there are persistent negative employment effects of mass lay-offs, and rural regions are more negatively affected on average. In part because of differences in the nature of the firm in the region, its relationship with nearby suppliers and clients, and the broader economic context of the region, productivity effects can be both positive and negative over the longer term.
    Keywords: economic shocks, local labour market, mass lay-offs, regional resilience
    JEL: J21 R12 R23
    Date: 2023–01–20
  2. By: Javier Ortega (Kingston University [London]); Gregory Verdugo (EPEE - Centre d'Etudes des Politiques Economiques - UEVE - Université d'Évry-Val-d'Essonne - Université Paris-Saclay, OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)
    Abstract: We study the impact of local immigration inflows on natives' wages using a large French administrative panel from 1976-2007. We show that local immigration inflows are followed by reallocations of blue-collar natives across commuting zones. Because these reallocations vary with the initial occupation and blue-collar location movers have wages below the blue-collar average, controlling for changes in local composition is crucial to assess how wages adjust to immigration. Immigration temporarily lowers the wages of blue-collar workers, with unskilled workers experiencing larger losses. Location movers lose more than stayers in terms of daily wages but move to locations with cheaper housing.
    Keywords: Immigration, Wages, Employment, France
    Date: 2021
  3. By: Randall Jackson (Regional Research Institute, West Virginia University); Caroline Welter (Regional Research Institute, West Virginia University); Gary Cornwall (U.S. Bureau of Economic Analysis)
    Abstract: Conventional wisdom holds that results from input-output (IO) models with greater sectoral detail are superior to those from models with less detail. However, there is an implicit assumption that the more detailed data are as accurate as their aggregated counterparts. In this paper, we explore the tradeoffs between sectoral detail and model accuracy in the context of IO regionalization, a practical context in which greater sectoral detail is commonly achieved via the imputation of missing values. This reality is especially apparent for increasingly smaller geographical regions where privacy concerns result in more suppressed and undisclosed data. As the number (or share) of disaggregated values that require imputation increases, the disaggregated model results will also deviate further from perfect accuracy. Is there a point at which using an aggregate model with greater certainty – relying on more reported and less imputed data – will provide results that are superior to a disaggregated model with greater potential imputation error and uncertainty? To address these questions, we design and implement simulation experiments founded on the concept of aggregation bias that enable us to evaluate the likelihoods that aggregate models would be superior to their disaggregated counterparts.
    Keywords: input-output, regionalization, aggregation bias
    Date: 2022–12–30
  4. By: Eugenia Go (World Bank); Kentaro Nakajima (Institute of Innovation Research, Hitotsubashi University); Yasuyuki Sawada (Faculty of Economics, The University of Tokyo); Kiyoshi Taniguchi (Asian Development Bank)
    Abstract: Spatially and seasonally granular measures of local economic activities are increasingly required in a variety of economic analyses. We propose using novel vehicle density data obtained from daytime satellite images to quantify the local economic activity involving human and goods traffic flows. Validation exercises show that vehicle density is a good proxy for local economic levels. We then apply our data to evaluate the impact of a new international airport terminal opening in the Philippines on local economies. The results show that the opening of the new terminal has spatially and seasonally heterogeneous impacts that conventional data cannot ca
    Date: 2023–01
  5. By: Marco Bellifemine; Adrien Couturier; Rustam Jamilov
    Abstract: We study monetary policy transmission across space. Empirically, we show that two channels explain a sizable portion of the variation in the regional effects of identified U.S. monetary policy shocks: local marginal propensities to consume (MPCs), as captured by household wealth, and industry composition, as measured by the local share of non-tradable employment. Theoretically, we develop a heterogeneous agents New Keynesian (HANK) model of a monetary union with two-layered regional heterogeneity in household and industry composition. We provide a sequence-space characterization of the response of local employment to unexpected changes in interest rates as a function of intertemporal MPCs and industry composition: the regional Keynesian cross. Central to our theory is an equilibrium complementarity between these two sources of regional heterogeneity. We provide direct empirical evidence of this household industry complementarity, thus validating our key model mechanism. Quantitatively, reactions from fiscal authorities and the rest of the nation are key determining factors of the aggregate regional economic response.
    Date: 2022–12–24

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