nep-geo New Economics Papers
on Economic Geography
Issue of 2023‒04‒03
eight papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. The economics of cities: from theory to data By Stephen J. Redding
  2. Exploring European regional trade By Marta Santamaría; Jaume Ventura; Uğur Yeşilbayraktar
  3. The geography of structural transformation: Effects on inequality and mobility By Kohei Takeda
  4. Institutional reforms and the employment effects of spatially targeted investment grants: The case of Germany's GRW By Bj\"orn Alecke; Timo Mitze
  5. Topography, borders, and trade across Europe By Richard Frensch; Jarko Fidrmuc; Michael Rindler
  6. Adapting to Climate Risk? Local Population Dynamics in the United States By Agustín Indaco; Francesc Ortega
  7. Changes in warehouse spatial patterns and rental prices: are they related? Exploring the case of US metropolitan areas By Renata de Oliveira; Laetitia Dablanc; Matthieu Shorung
  8. Measuring the Attractiveness of Trip Destinations: A Study of the Kansai Region By Keisuke Kondo

  1. By: Stephen J. Redding
    Abstract: Economic activity is highly unevenly distributed within cities, as reflected in the concentration of economic functions in specific locations, such as finance in the Square Mile in London. The extent to which this concentration reflects natural advantages versus agglomeration forces is central to a range of public policy issues, including the impact of local taxation and transport infrastructure improvements. This paper reviews recent quantitative urban models, which incorporate both differences in natural advantages and agglomeration forces and can be taken directly to observed data on cities. We show that these models can be used to estimate the strength of agglomeration forces and evaluate the impact of transportation infrastructure improvements on welfare and the spatial distribution of economic activity.
    Keywords: cities, commuting, transportation, urban economics
    Date: 2023–01–25
  2. By: Marta Santamaría; Jaume Ventura; Uğur Yeşilbayraktar
    Abstract: We use the new dataset of trade flows across 269 European regions in 24 countries constructed in Santamaria et al. (2020) to systematically explore for the first time trade patterns within and across country borders. We focus on the differences between home trade, country trade and foreign trade. We document the following facts: (i) European regional trade has a strong home and country bias, (ii) geographic distance and national borders are important determinants of regional trade, but cannot explain the strong regional home bias and (iii) the home bias is heterogeneous across regions and seems to be driven by political regional borders.
    Date: 2022–12
  3. By: Kohei Takeda
    Abstract: The interplay between structural transformation in the aggregate and local economies is key to understanding spatial inequality and worker mobility. This paper develops a dynamic overlapping generations model of economic geography where historical exposure to different industries creates persistence in occupational structure, and non-homothetic preferences and differential productivity growth lead to different rates of structural transformation. Despite the heterogeneity across locations, sectors, and time, the model remains tractable and is calibrated with the U.S. economy from 1980 to 2010. The calibration allows us to back out measures of upward mobility and inequality, thereby providing theoretical underpinnings to the Gatsby Curve. The counterfactual analysis shows that structural transformation has substantial effects on mobility: if there were no productivity growth in the manufacturing sector, income mobility would be about 6 percent higher, and if amenities were equalized across locations, it would rise by around 10 percent. In these effects, we find that different degrees of historical exposure to industries in local economies play an important role.
    Keywords: structural transformation, upward mobility, labor mobility, economic geography
    Date: 2022–12–12
  4. By: Bj\"orn Alecke; Timo Mitze
    Abstract: Spatially targeted investment grant schemes are a common tool to support firms in lagging regions. We exploit exogenous variations in Germany's main regional policy instrument (GRW) arriving from institutional reforms to analyse local employment effects of investment grants. Findings for reduced-form and IV regressions point to a significant policy channel running from higher funding rates to increased firm-level investments and newly created jobs. When we contrast effects for regions with high but declining funding rates to those with low but rising rates, we find that GRW reforms led to diminishing employment increases. Especially small firms responded to changing funding conditions.
    Date: 2023–02
  5. By: Richard Frensch (IOS Regensburg); Jarko Fidrmuc; Michael Rindler
    Abstract: The gravity literature has focused on distance, borders and contiguity to measure geography’s impact on trade. We add value to this literature in terms of data, method and assessment of effects. First, we expand existing geographical databases by adding topographical features. We supply novel detailed primary data on the international European river network. We also construct a new indicator for the ruggedness of trade routes for more than a thousand European country pairs. Second, we introduce a new approach to differentiate between contemporaneous versus historical trade costs. Third, we assess the impact of topography on trade across Europe by applying two-stage structural gravity estimations, identifying bilateral trade costs on the basis of a worldwide panel of manufacturing trade including countries’ domestic trade. We show that positive effects of rivers on trade are less important – and also less persistent over time – than the negative effects of mountains. While border effect estimates remain largely robust against variations in topography, much of the historical – and all of the contemporaneous – trade costs usually attributed to non-contiguity can be accounted for by topography. Finally, counterfactual simulations for western (along the river Rhine) versus southeastern (along the river Danube) European countries suggest that historically topography may have contributed to the marginalization of southeastern Europe in European trade.
    Keywords: Gravity, geography, panel models
    JEL: C23 F15 F40 O18
    Date: 2021–11
  6. By: Agustín Indaco (Carnegie Mellon University in Qatar); Francesc Ortega (CUNY, Queens College)
    Abstract: Using a new composite climate-risk index, we show that population in high-risk counties has grown disproportionately over the last few decades, even relative to the corresponding commuting zone. We also find that the agglomeration is largely driven by increases in the (white) working-age population. In addition, we show that high-risk tracts have typically grown more than low-risk tracts within the same county, suggesting the presence of highly localized amenities in high-risk areas. We also document heterogeneous population dynamics along a number of dimensions. Specifically, population has been retreating from high-risk, lowurbanization locations, but continues to grow in high-risk areas with high residential capital. The findings above hold for most climate hazards. However, we document that tracts with high risk of coastal flooding have grown significantly less than other tracts in the same county
    Keywords: Climate risk; Agglomeration; Migration
    JEL: J3 J7
    Date: 2023–03
  7. By: Renata de Oliveira (CEFET-MG - Centro Federal de Educação Tecnológica de Minas Gerais); Laetitia Dablanc (LVMT - Laboratoire Ville, Mobilité, Transport - ENPC - École des Ponts ParisTech - Université Gustave Eiffel); Matthieu Shorung (LVMT - Laboratoire Ville, Mobilité, Transport - ENPC - École des Ponts ParisTech - Université Gustave Eiffel)
    Abstract: In this paper, two hypotheses are explored linking urban characteristics to the spatial structure of warehouses: (i) the location of warehouses is closely related to the land/rent values of logistics facilities; and (ii) logistics sprawl is higher in cities with a high differential between land/rent values in city centers and peripheral areas. For that, we have considered logistics real estate and urban data for 48 United States metropolitan areas to analyze the urban spatial structure and the relationship among urban variables, warehouse location, and real estate rental prices. We also deliver a comparative analysis among the 48 metropolitan areas. The main results are (i) it is essential to classify metropolitan areas into a typology in order to perform comparative studies; (ii) warehouse location and rent prices are related to the concentration of urban activity; (iii) logistics sprawl is not significantly related to differential warehouse rental prices in the database that we explored.
    Date: 2022–01–01
  8. By: Keisuke Kondo (Research Institute of Economy, Trade and Industry and Research Institute for Economics and Business Administration, Kobe University, JAPAN)
    Abstract: This study proposes a novel concept of regional attractiveness index based on human mobility flows. Assuming that individuals' mobility choice is based on utility maximization, this study aims to recover the attractiveness of trip destinations by estimating the gravity equation for interregional trip flows. Using data from a Person Trip Survey in the Kansai region of Japan, this study investigates whether different trip purposes (e.g., commuting to office and school, recreational trips, business trips, and returning home) can reveal variations in the attractiveness of trip destinations in a geographical space. This study found that the proposed approach using interregional trip flows can effectively capture the extent to which trip destinations attract people from a region-wide perspective. As real-time human mobility data becomes increasingly available in the age of Big Data, the new index of regional attractiveness is expected to become a key performance indicator for daily monitoring of urban and regional economies.
    Keywords: Regional attractiveness index; Person trip survey; Gravity equation
    JEL: J61 R23 R41
    Date: 2023–03

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