nep-geo New Economics Papers
on Economic Geography
Issue of 2024‒02‒19
eight papers chosen by
Andreas Koch, Institut für Angewandte Wirtschaftsforschung

  1. Behind the Eastern-Western European convergence path: the role of geography and trade liberalization By Adolfo Cristobal Campoamor; Osiris Jorge Parcero
  2. Spatial wage inequality in North America and Western Europe: changes between and within local labour markets 1975-2019 By Bauluz, Luis; Bukowski, Pawel; Fransham, Mark; Lee, Annie Seong; López Forero, Margarita; Novokmet, Filip; Breau, Sébastien; Lee, Neil; Malgouyres, Clément; Schularick, Moritz; Verdugo, Gregory
  3. Splitting up or dancing together? Local institutional structure and the performance of urban areas By Di Cataldo, Marco; Ferranna, Licia; Gerolimetto, Margherita; Magrini, Stefano
  4. Regional productivity differences in the UK and France: from the micro to the macro By Kauma, Bridget; Mion, Giordano
  5. Proximity of firms to scientific production By Bergeaud, Antonin; Guillouzouic, Arthur
  6. Regional entrepreneurship: Pain or gain for economic growth? By Dienes, Christian; Schneck, Stefan; Wolter, Hans-Jürgen
  7. The skyscraper revolution: global economic development and land savings By Ahlfeldt, Gabriel M.; Baum-Snow, Nathaniel; Jedwab, Remi
  8. Actualised and future changes in regional economic growth through sea level rise By Theodoros Chatzivasileiadis; Ignasi Cortes Arbues; Jochen Hinkel; Daniel Lincke; Richard S.J. Tol

  1. By: Adolfo Cristobal Campoamor; Osiris Jorge Parcero
    Abstract: This paper proposes a two blocks and three regions economic geography model that can account for the most salient stylized facts experienced by Eastern European transition economies during the period 1990 2005. In contrast to the existing literature, which has favored technological explanations, trade liberalization is the only driving force. The model correctly predicts that in the first half of the period, trade liberalization led to divergence in GDP per capita, both between the West and the East and within the East. Consistent with the data, in the second half of the period, this process was reversed and convergence became the dominant force.
    Date: 2024–01
  2. By: Bauluz, Luis; Bukowski, Pawel; Fransham, Mark; Lee, Annie Seong; López Forero, Margarita; Novokmet, Filip; Breau, Sébastien; Lee, Neil; Malgouyres, Clément; Schularick, Moritz; Verdugo, Gregory
    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; ES/V013548/1; EXC 2126/1– 390838866
    JEL: J3 R1 R23
    Date: 2023–08–16
  3. By: Di Cataldo, Marco; Ferranna, Licia; Gerolimetto, Margherita; Magrini, Stefano
    Abstract: This article analyzes institutional changes in local governance structures as determinants of wage premium and innovation capacity of urban areas. By combining individual and metropolitan area data for the US, we study the role of institutional fragmentation, related to the number of local governments operating in an area, and institutional coordination, stemming from the creation of authorities fostering the collaboration of local governments. Our findings suggest that more fragmented institutional landmarks do not benefit the wage competitiveness and innovativeness of urban areas. If anything, they harm them. Conversely, stronger coordination among local governments boosts the productivity of functional regions by increasing their wage premium and improving their capacity to innovate. Coordination agreements between different counties or municipalities are especially relevant in the case of urban areas modifying their functional borders over time. These findings provide key insights into the economic effects of reforming the governance structure of metropolitan areas.
    Keywords: innovation; institutional coordination; institutional fragmentation; local governance; US MSAs; wage premium
    JEL: H70 R12 R23 J30
    Date: 2023–01–06
  4. By: Kauma, Bridget; Mion, Giordano
    Abstract: We propose a new data resource that attempts to overcome limitations of standard firm-level datasets for the UK (like the ARD/ABS) by building on administrative data covering the population of UK firms with at least one employee. We also construct a similar dataset for France and use both datasets to: 1) Provide some highlights of the data and an overall picture of the evolution of aggregate UK and French productivity and markups: 2) Analyse the spatial distribution of productivity in both countries at a fine level of detail - 228 Travel to Work Areas (TTWAs) for the UK and 297 Zones da'emploi (ZEs) for France - while focusing on the role of economic density. Our findings suggest that differences in firm productivity across regions are magnified in the aggregate by an increasing productivity return of density along the productivity distribution.
    Keywords: firm-level dataset; merging; BSD; FAME; VAT; FICUS; FARE; productivity; markups; UK; France; regional disparities; density
    JEL: R12 D24
    Date: 2023–11–01
  5. By: Bergeaud, Antonin; Guillouzouic, Arthur
    Abstract: Following Bergeaud et al. (2022), we construct a new measure of proximity between industrial sectors and public research laboratories. Using this measure, we explore the underlying network of knowledge linkages between scientific fields and industrial sectors in France. We show empirically that there exists a significant negative correlation between the geographical distance between firms and laboratories and their scientific proximity, suggesting strongly localized spillovers. Moreover, we uncover some important differences by field, stronger than when using standard patent-based measures of proximity.
    Keywords: knowledge spillovers; technological distance; public laboratories
    JEL: O32 O38 R12
    Date: 2023–11–15
  6. By: Dienes, Christian; Schneck, Stefan; Wolter, Hans-Jürgen
    Abstract: This research note examines the relationship between start-up rates and GDP per capita growth in urban and rural regions in Germany. Hereby, we take into account that urban and rural areas differ markedly in their resource endowment for entrepreneurship, which might be responsible for different effects of start-up activity on regional development. Therefore, we examine the growth implications rural entrepreneurship might have on the local economy. Our results suggest that new business formation is positively associated with economic growth in rural areas. In urban districts, however, the effect of start-up activity is insignificant. Therefore, regional development is less dependent on the emergence of new businesses in urban counties. The results also unveil that the often-cited inverse U-shaped relationship between entrepreneurship and GDP growth is mainly evident in rural areas.
    Keywords: Regional growth, entrepreneurship, start-up rate
    JEL: L26 O18 O47
    Date: 2024
  7. By: Ahlfeldt, Gabriel M.; Baum-Snow, Nathaniel; Jedwab, Remi
    Abstract: Tall buildings are central to facilitating sustainable urbanization and growth in cities worldwide. We estimate average elasticities of city population and built area to aggregate city building heights of 0.12 and -0.17, respectively, indicating that the largest global cities in developing economies would be at least one-third smaller on average without their tall buildings. Land saved from urban development by post-1975 tall building construction is over 80% covered in vegetation. To isolate the effects of technology-induced reductions in the cost of height from correlated demand shocks, we use interactions between static demand factors and the geography of bedrock as instruments for observed 1975-2015 tall building construction in 12, 877 cities worldwide, a triple difference identification strategy. Quantification using a canonical urban model suggests that the technology to build tall generates a potential global welfare gain of 4.8%, of which only about one-quarter has been realized. Estimated welfare gains from relaxing existing height constraints are 5.9%in the developed world and 3.1% in developing economies.
    Keywords: urban density; international buildings heights; skyscrapers; tall buildings; sustainable urbanization; city growth; commercial real estate; housing supply; urban sprawl; land savings; housing affordability; geographical constraints; environment
    JEL: R11 R12 R14 R31 R33 O18 O13
    Date: 2023–11–14
  8. By: Theodoros Chatzivasileiadis; Ignasi Cortes Arbues; Jochen Hinkel; Daniel Lincke; Richard S.J. Tol (Department of Economics, University of Sussex, BN1 9SL Falmer, United Kingdom)
    Abstract: This study investigates the long-term economic impact of sea-level rise (SLR) on coastal regions in Europe, focusing on Gross Domestic Product (GDP). Using a novel dataset covering regional SLR and economic growth from 1900 to 2020, we quantify the relationships between SLR and regional GDP per capita across 79 coastal EU & UK regions. Our results reveal that the current SLR has already negatively influenced GDP of coastal regions, leading to a cumulative 4.7% loss at 39 cm of SLR. Over the 120 year period studied, the actualised impact of SLR on the annual growth rate is between -0.02% and 0.04%. Extrapolating these findings to future climate and socio-economic scenarios, we show that in the absence of additional adaptation measures, GDP losses by 2100 could range between -6.3% and -20.8% under the most extreme SLR scenario (SSP5-RCP8.5 High-end Ice, or -4.0% to -14.1% in SSP5-RCP8.5 High Ice). This statistical analysis utilising a century-long dataset, provides an empirical foundation for designing region-specific climate adaptation strategies to mitigate economic damages caused by SLR. Our evidence supports the argument for strategically relocating assets and establishing coastal setback zones when it is economically preferable and socially agreeable, given that protection investments have an economic impact.
    Keywords: climate change; sea level rise
    JEL: Q54
    Date: 2024–01

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