nep-geo New Economics Papers
on Economic Geography
Issue of 2023‒10‒02
five papers chosen by
Andreas Koch, Institut für Angewandte Wirtschaftsforschung

  1. Spatial Production Networks By Costas Arkolakis; Federico Huneeus; Yuhei Miyauchi
  2. Internal Migration, Remittances and Economic Development By Xiameng Pan; Chang Sun
  3. Agglomeration or Market Access? The Defining Factors of Firms' Location Choice By Dennis Gaus; Georg Hirte
  4. Distributional Equity in the Employment and Wage Impacts of Energy Transitions By Ben Gilbert; Hannah Gagarin; Ben Hoen
  5. Clean Growth By Costas Arkolakis; Conor Walsh

  1. By: Costas Arkolakis; Federico Huneeus; Yuhei Miyauchi
    Abstract: We use new theory and data to study how firms endogenously form production networks across regions and countries. Supplier and buyer relationships form depending on firms’ productivity and geographic location. We characterize the normative and positive properties of the spatial distribution of economic activity and welfare in general equilibrium. We calibrate the model using domestic and international firm-to-firm trade data from Chile. Both iceberg trade costs and search and matching frictions are important for aggregate trade flows and production networks. Endogenous formation of production networks leads to larger and more dispersed effects of international and intranational trade cost shocks.
    Date: 2023–02
  2. By: Xiameng Pan; Chang Sun
    Abstract: We develop a quantitative spatial equilibrium model with endogenous migration and remittance decisions within households to examine the joint effect of migration and remittances on economic development. We apply the model to internal migration in China. Counterfactual analysis of the calibrated model shows that the presence of remittances increases migration and welfare, reduces regional inequality and facilitates structural change. Compared to a conventional single-person migration model, our household model suggests a larger reduction in regional inequality and stronger reallocation of employment from agriculture to manufacturing and services in response to the decline in migration costs over the period of 2000 to 2010.
    Keywords: remittances, migration, structural change, spatial equilibrium
    JEL: O10 R10 R20
    Date: 2023
  3. By: Dennis Gaus; Georg Hirte
    Abstract: As research indicates a gap between complex scientific measures of accessibility and simpler proxies used by firms, this paper analyses the impact of several market access indicators on the location decision of firms. It compares the role of inter- and intra-industry agglomeration as proxies of access with a newly developed gravity-based indicator incorporating transport distances and industry relations. The estimation results of a nested mixed multinomial logit model, based on a sample of 110, 083 German firms, provide evidence that agglomeration effects play an essential role in firms’ location choice, whereas the complex market access measure does not have a significant impact. This outcome holds true for large as well as small and medium sized enterprises and is confirmed in several robustness checks. Thus, the paper provides guidance to further research on companies’ location decisions, highlighting that access indicators should be chosen specifically for the scientific context, as well as to firms to make more efficient location choices from the perspective of market access.
    Keywords: Transportation, accessibility, location choice, agglomeration, market access
    JEL: L14 O18 R12 R32
    Date: 2023
  4. By: Ben Gilbert; Hannah Gagarin; Ben Hoen
    Abstract: We use restricted-access, geocoded data on the near-universe of workers in 23 U.S. states in order to quantify the impact of wind energy development on local earnings and employment, by race, ethnicity, sex, and educational attainment. We find the largest relative impacts for workers without a high school education, or workers with a college education, in addition to other systematic differences across sub-populations. We compare these results to estimates using county aggregates of the worker-level data, such as can be obtained using publicly available data. We find that (a) county-level estimates are dramatically dampened relative to geocoded worker-level estimates, and (b) the degree of bias differs by sub-population such that qualitative comparisons of impacts are not consistent using restricted-access data versus county-level data for most sub-populations. We discuss implications for achieving equity goals within energy transition policies.
    JEL: Q4 Q42 Q43 R11 R12
    Date: 2023–08
  5. By: Costas Arkolakis; Conor Walsh
    Abstract: We provide a spatial theory of clean growth to assess the global impact of the rise of renewable energy. We model the details of the combined production and transmission network of electricity (“the grid”) that determine the supply and losses of energy in space. The local rate of clean energy adoption depends on learning-by-doing, the global electricity and trade network, and regional comparative advantage in renewable resources. We use the model to measure the aggregate and spatial implications of clean growth. We find that the world’s power system is likely to be dominated by renewables by 2040 in a range of scenarios, with substantial welfare gains, even in the absence of policy. Incorporating policy, we find that the US Inflation Reduction Act significantly accelerates renewable uptake, and generates substantial economic benefits. In addition, planned grid improvements lower prices substantially in many areas of the US, justifying their cost of construction.
    JEL: F11 Q40 Q41 Q42 Q43 R13
    Date: 2023–08

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