nep-geo New Economics Papers
on Economic Geography
Issue of 2023‒07‒31
five papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. The death and life of great British cities By Stephan Heblich; David Krisztián Nagy; Alex Trew; Yanos Zylberberg
  2. How does Regional Entrepreneurship Transfer over Time? The Role of Household Size and Economic Success By Michael Wyrwich; Michael Fritsch
  3. Global value chains, functional diversification and within-country inequality: an empirical assessment By Andrea Coveri; Elena Paglialunga; Antonello Zanfei
  4. Science and productivity in European Firms: How do regional innovation modes matter? By Natália Barbosa; Ana Paula Faria
  5. Political preferences and the spatial distribution of infrastructure:evidence from California’s high-speed rail By Pablo Fajgelbaum; Cecile Gaubert; Nicole Gorton; Eduardo Morales Morales; Edouard Schaal

  1. By: Stephan Heblich; David Krisztián Nagy; Alex Trew; Yanos Zylberberg
    Abstract: This paper studies how cities' industrial structure shapes their life and death. Our analysis exploits the large heterogeneity in the early composition of English and Welsh cities. We extract built-up clusters from early historical maps, identify settlements at the onset of the nineteenth century, and isolate exogenous variation in the nature of their rise during the transformation of the economy by the end of the nineteenth century. We then estimate the causal impact of cities' population and industrial specialization on their later dynamics. We find that cities specializing in a small number of industries decline in the long run. We develop a dynamic spatial model of cities to isolate the forces which govern their life and death. Intratemporally, the model captures the role of amenities, land, local productivity and trade in explaining the distribution of economic activity across industries and cities. Intertemporally, the model can disentangle the role of aggregate industry dynamics from city-specific externalities. We find that the long-run dynamics of English and Welsh cities is explained to a large extent by such dynamic externalities a la Jacobs.
    Keywords: Specialization; cities over time; quantitative economic geography.
    JEL: F63 N93 O14 R13
    Date: 2023–07
  2. By: Michael Wyrwich (University of Groningen, and Friedrich Schiller University Jena); Michael Fritsch (Friedrich Schiller University Jena)
    Abstract: Mounting empirical evidence shows that regional differences of entrepreneurship are persistent over long periods of time that may reflect the prevalence of an entrepreneurial culture. We explore three important mechanisms behind the transmission of such an entrepreneurial culture. First, we analyze the role model effects at the household level. We hypothesize that the larger the households of self-employed, the greater the opportunities for role model effects such as an intergenerational transfer of entrepreneurial values and attitudes, and hence the higher the regional start-up rate in later periods. Second, we investigate how the economic success of regional entrepreneurs fuels the role model effects. Third, we analyze if and to what extent the economic success in of regional entrepreneurship stimulates a collective memory of historical entrepreneurship that spurs self-employment in later periods. The analysis of entrepreneurship in German regions over a period of more than 90 years provides support for the significance of all three transfer channels.
    Keywords: Entrepreneurship, intertemporal transfer, regional trajectories
    JEL: L26 R11 O15 J1
    Date: 2023–07–03
  3. By: Andrea Coveri (Department of Economics, Society & Politics, Università di Urbino Carlo Bo); Elena Paglialunga (Department of Economics, Society & Politics, Università di Urbino Carlo Bo); Antonello Zanfei (Department of Economics, Society & Politics, Università di Urbino Carlo Bo)
    Abstract: A growing literature has stressed that the geographical dispersion of production and the subsequent rise of global value chains (GVCs) are associated with important social and economic disparities across countries. However, systemic empirical evidence on the distributional consequences of GVCs within countries has so far been rather limited. In this work, we take a step forward in the direction of filling this gap by providing a comprehensive empirical assessment of the GVC-inequality nexus on a sample including more than 100 countries over the period 2003-2015. Our results show that (i) the association between trade in GVC and income inequality is conditioned by the GVC positioning of countries; (ii) greater shares of FDIs in the upstream (i.e., knowledgeintensive activities such as R&D, design and training) and downstream (i.e., logistics, marketing and post-sales services) segments of the value chain are associated with lower income inequality; (iii) greater functional diversification in FDI is associated with lower levels of income disparities within countries, consistent with the hypothesis that a larger mix of value-adding activities an economy carries out expands learning opportunities and occupational choices for its workers and is conducive to a more inclusive development.
    Keywords: Global value chains; inequality; international trade, FDI; value chain functions;functional diversification
    Date: 2023
  4. By: Natália Barbosa; Ana Paula Faria (Department of Economics and NIPE, University of Minho; Department of Economics and NIPE, University of Minho,)
    Abstract: Productivity disparities in the European regions tend to persist. In order to understand the underlying sources of this phenomenon we assess the importance of science and regional innovation modes on firms’ productivity growth on a sample of 150, 712 firms across 161 NUTSII European regions, over the period 2012-2017. We find that science is a major source of firms’ productivity growth, and it has been particularly important to firms located in Southern Europe and, to less extent, in Eastern EU regions, indicating that a science-push convergence process is at work in the EU peripheral regions. Our findings also show that the fast-growing productivity firms are those who benefit more from external knowledge and innovation. Growth by imitation seems to be a viable strategy restricted to the slow-growing productivity firms. These results help to conciliate contentious evidence regarding firms’ benefits from spillovers, namely from scientific knowledge.
    Keywords: Territorial innovation patterns, Firm productivity, Europe, Quantile regression
    JEL: O33 O38 L25 R11
    Date: 2023–07
  5. By: Pablo Fajgelbaum; Cecile Gaubert; Nicole Gorton; Eduardo Morales Morales; Edouard Schaal
    Abstract: How do political preferences shape transportation policy? We study this question in the context of California's High-Speed Rail (CHSR). Combining geographic data on votes in a referendum on the CHSR with a model of its expected economic benefits, we estimate the weight of economic and non-economic considerations in voters'preferences. Then, comparing the proposed distribution of CHSR stations with alternative placements, we use a revealed-preference approach to estimate policymakers' preferences for redistribution and popular approval. While voters did respond to expected real-income benefits, non-economic factors were a more important driver of the spatial distribution of voters' preferences for the CHSR. While the voter-approved CHSR would have led to modest income gains, proposals with net income losses also would have been approved due to political preferences. For the planner, we identify strong preferences for popular approval. A politically-blind planner would have placed the stations closer to dense metro areas in California.
    Keywords: transportation, infrastructure, political economy
    JEL: H54 P11 R13 R4
    Date: 2023–06

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