nep-geo New Economics Papers
on Economic Geography
Issue of 2023‒06‒12
nine papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Spatial Structural Change By Fabian Eckert; Michael Peters
  2. Evaluating the Principle of Relatedness: Estimation, Drivers and Implications for Policy By Frank Neffke; Yang Li
  3. The Creation and Diffusion of Knowledge: Evidence from the Jet Age By Stefan Pauly; Fernando Stipanicic
  4. Bank Branch Access: Evidence from Geolocation Data By Jung Sakong; Alexander Zentefis
  5. Seizing the window of opportunity? The Swedish public innovation system’s support to private business in the early Covid-19 pandemic By Fridholm, Tobias
  6. Is Income Inequality Converging at the Regional Level? Evidence from LIS Data By Philipp Erfurth
  7. An urban overhead? Crime, agglomeration, and amenity By Stuart Donovan; Thomas de Graaff; Henri L.F. de Groot; Aaron Schiff
  8. Market Size and Trade in Medical Services By Jonathan Dingel; Joshua D. Gottlieb; Maya Lozinski; Pauline Mourot
  9. Re-examining Regional Income Convergence: A Distributional Approach By Kevin Rinz; John Voorheis

  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.
    Keywords: Structural change; Industrial structure; Economic geography; Growth
    Date: 2022–09–22
  2. By: Frank Neffke (Center for International Development at Harvard University); Yang Li
    Abstract: A growing body of research documents that the size and growth of an industry in a place depends on how much related activity is found there. This fact is commonly referred to as the "principle of relatedness." However, there is no consensus on why we observe the principle of relatedness, how best to determine which industries are related or how this empirical regularity can help inform local industrial policy. We perform a structured search over tens of thousands of specifications to identify robust – in terms of out-of-sample predictions – ways to determine how well industries fit the local economies of US cities. To do so, we use data that allow us to derive relatedness from observing which industries co-occur in the portfolios of establishments, firms, cities and countries. Different portfolios yield different relatedness matrices, each of which help predict the size and growth of local industries. However, our specification search not only identifes ways to improve the performance of such predictions, but also reveals new facts about the principle of relatedness and important trade-offs between predictive performance and interpretability of relatedness patterns. We use these insights to deepen our theoretical understanding of what underlies path-dependent development in cities and expand existing policy frameworks that rely on inter-industry relatedness analysis.
    Keywords: Economic Complexity, Structural Transformation, Cities
    Date: 2023–03
  3. By: Stefan Pauly (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Fernando Stipanicic (UC Berkeley - University of California [Berkeley] - UC - University of California)
    Abstract: Click here for the latest version This paper provides new causal evidence of the impact of air travel time on the creation and diffusion of knowledge. We exploit the beginning of the Jet Age as a quasi-natural experiment. We digitize airlines' historical flight schedules and construct a novel data set of the flight network in the United States. Between 1951 and 1966, travel time between locations more than 2, 000 km apart decreased on average by 41%. The reduction in travel time explains 33% of the increase in knowledge diffusion as measured by patent citations. The increase in knowledge diffusion further caused an increase in the creation of new knowledge. The results provide evidence that jet airplanes led to innovation convergence across locations and contributed to the shift in innovation activity towards the South and the West of the United States.
    Date: 2022–10–21
  4. By: Jung Sakong; Alexander Zentefis
    Abstract: Low-income and Black households are less likely to visit bank branches than high-income and White households, despite the former two groups appearing to rely more on branches as means of bank participation. We assess whether unequal branch access can explain that disparity. We propose a measure of bank branch access based on a gravity model of consumer trips to bank branches, estimated using mobile device geolocation data. Residents have better branch access if branches are closer or have superior qualities that attract more visitors. Because the geolocation data is distorted to protect user privacy, we estimate the gravity model with a new econometric method that adapts the Method of Simulated Moments to handle high-dimensional fixed effects. We find no evidence that low-income communities lack access to bank branches and instead find that lower demand for bank branch products or services explains their lower branch use. But in Black communities, worse access explains their entire drop-off in branch use. For residents of these areas, weaker access is not from having lower quality branches, but from branches being located farther away from them. The results highlight parts of the country that would benefit the most from policies that expand access to banking.
    Keywords: Inequality; location economics; spatial analysis; Banking
    JEL: D14 G21 J15 R20
    Date: 2023–04–11
  5. By: Fridholm, Tobias (Jönköping International Business School)
    Abstract: This paper investigates the Swedish public innovation system’s response to the Covid-19 pandemic during 2020 in terms of initiatives targeting private business. It is based on a review of the websites of 181 major national and regional organisations in the Swedish public innovation system. A total of 208 initiatives were observed. The study shows that almost all national agencies and regional councils responded, but among more specialised organisations the response was scattered. The responses were on general rather swift, and most of them concerned short-term crisis management. Initiatives to build long-term strength, e.g. re-skilling or platforms for potentially more radical renewal, were much fewer and often thematically unspecified. There is a moderately strong correlation between region size and response, but also regional differences on other dimensions, for example, regions strong in innovation involved expertise in specialised innovation support organisations to a much higher extent than other. Almost all university response came from ‘young’ universities. The largest and most research-intensive universities are almost absent in the material. Policy implications focus on the need to strengthen the innovation system’s capacity to be agile and initiate support initiatives with long-term perspectives in times of crisis.
    Keywords: industrial and innovation policy; public innovation support; regional innovation policy; regional resilience; sustainability transitions
    JEL: O31 O32 O38 R58
    Date: 2023–05–15
  6. By: Philipp Erfurth
    Abstract: This study provides new insights into regional income inequality convergence across and within countries, building on the increased availability of Luxem- bourg Income Study (LIS) data. It finds evidence of regional income inequal- ity convergence across countries, but finds heterogenous trends within coun- tries. The study also explores the impact of state systems on regional income inequality convergence, providing evidence that the state system (federal, unitary or hybrid) matters for income inequality convergence, with unitary states being associated with regional income inequality convergence.
    Date: 2022–06
  7. By: Stuart Donovan (Vrije Universiteit Amsterdam); Thomas de Graaff (Vrije Universiteit Amsterdam); Henri L.F. de Groot (Vrije Universiteit Amsterdam); Aaron Schiff (Schiff Consulting)
    Abstract: Using data for 134 locations in New Zealand, we study the effects of crime and agglomeration on urban amenity. We find that crime has significant negative effects on the value of urban amenity, with elasticities of approximately ?0.06 for firms and ?0.09 for workers. To put this effect in context, this implies the value of urban amenity for workers is approximately 2–3 times more sensitive to crime than average temperature. More uniquely, we find that controlling for crime leads to somewhat larger estimates of agglomeration economies. Together, these results suggest that crime detracts significantly from the value of urban amenity and may also act as an urban congestion cost that serves to undermine agglomeration economies.
    Keywords: crime, urban development, agglomeration economies, amenity, New Zealand
    JEL: R21 R31 C11
    Date: 2023–04–28
  8. By: Jonathan Dingel; Joshua D. Gottlieb; Maya Lozinski; Pauline Mourot
    Abstract: We measure the importance of increasing returns to scale and trade in medical services. Using Medicare claims data, we document that “imported” medical care—services produced by a medical provider in a different region—constitute about one-fifth of US healthcare consumption. Larger regions specialize in producing less common procedures, which are traded more. These patterns reflect economies of scale: larger regions produce higher-quality services because they serve more patients. Because of increasing returns and trade costs, policies to improve access to care face a proximity-concentration tradeoff. Production subsidies and travel subsidies can impose contrasting spillovers on neighboring regions.
    Keywords: Market-size effects; Trade in services; Medicare claims data; Healthcare access
    JEL: F14 I11 F12 R12
    Date: 2023–04–04
  9. By: Kevin Rinz; John Voorheis
    Abstract: We re-examine recent trends in regional income convergence, considering the full distribution of income rather than focusing on the mean. Measuring similarity by comparing each percentile of state distributions to the corresponding percentile of the national distribution, we find that state incomes have become less similar (i.e. they have diverged) within the top 20 percent of the income distribution since 1969. The top percentile alone accounts for more than half of aggregate divergence across states over this period by our measure, and the top five percentiles combine to account for 93 percent. Divergence in top incomes across states appears to be driven largely by changes in top incomes among White people, while top incomes among Black people have experienced relatively little divergence.
    Keywords: Wages; Regional convergence; Distribution; Income; Race
    JEL: J30 R10
    Date: 2023–03–09

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