nep-geo New Economics Papers
on Economic Geography
Issue of 2023‒11‒20
six papers chosen by
Andreas Koch, Institut für Angewandte Wirtschaftsforschung

  1. Export Induced Spatial Divergence By Jonas Casper; Lei Li; Jinfeng Luo
  2. Regional Industrial Effects in Germany from a Potential Gas Deficit By Robert Lehmann; Christoph Schult
  3. The Linear Algebra of Economic Geography Models By Benny Kleinman; Ernest Liu; Stephen J. Redding
  4. Spatial wage inequality in North America and Western Europe: changes between and within local labour markets 1975-2019 By Luis Bauluz; Sebastien Breau; Pawel Bukowski; Mark Fransham; Annie Seong Lee; Neil Lee; Margarita Lopez Forero; Clement Malgouyres; Filip Novokmet; Moritz Schularick; Gregory Verdugo
  5. Remote work and high-proximity employment in Mexico By Lorenzo Aldeco Leo; Alejandrina Salcedo
  6. Immigration and Regional Specialization in AI By Hanson, Gordon H.

  1. By: Jonas Casper (LMU Munich); Lei Li (University of Mannheim); Jinfeng Luo (Lingnan University)
    Abstract: How does export liberalization affect firm location choice and the spatial concentration of economic activity? We address these questions using the geo-coordinates of Chinese manufacturing firms and find that export widens inter-city and intra-city spatial disparities by reinforcing initially large industry centers. We first show that there has been an increased spatial concentration across cities in response to improved foreign market access. Only industry city pairs that were large initially increase their employment density following trade liberalization. Second, there has also been an increased spatial concentration within cities. For a given industry, districts closer to city centers are getting denser, mainly driven by the extensive margin. Third, the above effects are not exclusive to industries directly exposed to export shocks but also spill over positively to upstream and downstream industries and negatively to industries competing for the same workers locally.
    Keywords: firm location; localization; spatial concentration; regional inequality; export; comparative advantage;
    JEL: F6 F14 R12
    Date: 2023–10–16
  2. By: Robert Lehmann; Christoph Schult
    Abstract: We estimate potential regional industrial effects in case of a threatening gas deficit. For Germany, the reduction leads to a potential decrease in industrial value added by 1.6%. The heterogeneity across German states is remarkable, ranging from 2.2% for Rhineland-Palatinate to 0.7% for Hamburg. We emphasize the need for regional input-output tables to conduct economic analysis on a sub-national level, particularly when regional industrial structures are heterogeneous. The approximation with national figures can lead to results that differ both in magnitude and relative regional exposure. Our findings highlight that more accurate policy guidance can be achieved by improving the regional database.
    Keywords: gas shortage, input-output analysis, regional economic impacts, Germany
    JEL: R11 R15 R19
    Date: 2023
  3. By: Benny Kleinman (University of Chicago); Ernest Liu (Princeton University); Stephen J. Redding (Princeton University, CEPR, and NBER)
    Abstract: We provide sufficient statistics for nominal and real wage exposure to productivity shocks in a constant elasticity economic geography model. These exposure measures summarize the first-order general equilibrium elasticity of nominal and real wages in each location with respect to productivity shocks in all locations. They are readily computed using commonly available trade data and the values of trade and migration elasticities. They have an intuitive interpretation in terms of underlying economic mechanisms. Computing these measures for all bilateral pairs of locations involves a single matrix inversion and therefore remains computational efficient even with an extremely high-dimensional state space. These sufficient statistics provide theory-consistent measures of locations’ exposure to productivity shocks for use in further economic and statistical analysis.
    Keywords: economic geography, trade, migration
    JEL: F10 F15 R12
    Date: 2023–07
  4. By: Luis Bauluz; Sebastien Breau; Pawel Bukowski; Mark Fransham; Annie Seong Lee; Neil Lee; Margarita Lopez Forero; Clement Malgouyres; Filip Novokmet; Moritz Schularick; Gregory Verdugo
    Abstract: The rise of economic inequalities in advanced economies has been often linked with the growth of spatial inequalities within countries, yet there is limited comparative research that studies the relationship between national and subnational economic inequality. This paper presents the first systematic attempt to create internationally comparable evidence showing how different countries perform in terms of geographic wage inequalities. We create cross-country comparable measures of spatial wage disparities between and within similarly-defined local labour market areas (LLMAs) for Canada, France, (West) Germany, the UK and the US since the 1970s, and assess their contribution to national inequality. By the end of the 2010s, spatial inequalities in LLMA mean wages are similar in Canada, France, Germany and the UK; the US exhibits the highest degree of spatial inequality. Over the study period, spatial inequalities have nearly doubled in all countries, except for France where spatial inequalities have fallen back to 1970s levels. Due to a concomitant increase in within-place inequality, the contribution of places in explaining national wage inequality has remained fairly constant over the 40-year study period, except in the UK where we document a significant increase. Whilst common global social, economic and technological shocks are important drivers of spatial inequality, this variation in levels and trends of spatial inequality opens the way to comparative research exploring the role of national institutions in mediating how global shocks translate into economic disparities between places.
    Keywords: regional inequality, wage inequality, local labour markets
    Date: 2023–08–16
  5. By: Lorenzo Aldeco Leo; Alejandrina Salcedo
    Abstract: We show that in Mexico, larger shares of potential remote work at the municipality level are related to lower post-pandemic employment in high proximity consumer services, a large sector that mainly employs low-income workers. We use a triple difference event study design where we compare employment in high and low proximity sectors across municipalities with different levels of remote work potential, before and after the pandemic. Our results are not driven by changing patterns of consumption associated to Internet access during the pandemic. Since high proximity employment tends to locate in places where the propensity to remote work occupations is larger, such as cities, our estimates imply that remote work may have slowed the employment recovery from the pandemic in certain regions. A counterfactual where we reassign remote work potential equally across municipalities results in a more robust recovery in Mexico's service-intensive central region, which faced the steepest, most persistent drop in service employment. Our results suggest that if remote work remains an important feature of labor markets, consumer service sectors in cities in the developing world may face challenges stemming from these new work arrangements in the post-COVID era.
    Keywords: remote work, consumer services, middle-income countries, regional labour markets
    JEL: O33 R11 J2
    Date: 2023–10
  6. By: Hanson, Gordon H.
    Abstract: I examine the specialization of US commuting zones in AI-related occupations over the 2000 to 2018 period. I define AI-related jobs based on keywords in Census occupational titles. Using the approach in Lin (2011) to identify new work, I measure job growth related to AI by weighting employment growth in AI-related occupations by the share of job titles in these occupations that were added after 1990. Overall, regional specialization in AI-related activities mirrors that of regional specialization in IT. However, foreign-born and native-born workers within the sector tend to cluster in different locations. Whereas specialization of the foreign-born in AI-related jobs is strongest in high-tech hubs with a preponderance of private-sector employment, native-born specialization in AI-related jobs is strongest in centers for military and space-related research. Nationally, foreign-born workers account for 55% of job growth in AI-related occupations since 2000. In regression analysis, I find that US commuting zones exposed to a larger increases in the supply of college-educated immigrants became more specialized in AI-related occupations and that this increased specialization was due entirely to the employment of the foreign born. My results suggest that access to highly skilled workers constrains AI-related job growth and that immigration of the college-educated helps relax this constraint. (Stone Center on Socio-Economic Inequality Working Paper)
    Date: 2023–10–25

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