nep-geo New Economics Papers
on Economic Geography
Issue of 2024‒04‒22
eight papers chosen by
Andreas Koch, Institut für Angewandte Wirtschaftsforschung

  1. Global production networks meets evolutionary economic geography By Lee, Neil
  2. Spatial Search By Xiaoming Cai; Pieter Gautier; Ronald Wolthoff; Pieter A. Gautier
  3. Who benefits from place-based policies? Evidence from matched employer-employee data By Grunau, Philipp; Hoffmann, Florian; Lemieux, Thomas; Titze, Mirko
  4. Local retail prices, product variety and neighborhood change By Borraz, Fernando; Carozzi, Felipe; Gonzalez Pampillon, Nicolas; Zipitría, Leandro
  5. Paying off populism: How regional policies affect voting behavior By Gold, Robert; Lehr, Jakob
  6. The Long-Run Impacts of Public Industrial Investment on Local Development and Economic Mobility: Evidence from World War II By Andrew Garin; Jonathan L. Rothbaum
  7. Macroeconomic Spillovers of Weather Shocks across U.S. States By Emanuele Bacchiocchi; Andrea Bastianin; Graziano Moramarco
  8. GEOWEALTH-US: spatial wealth inequality data for the United States, 1960–2020 By Suss, Joel; Kemeny, Tom; Connor, Dylan S.

  1. By: Lee, Neil
    Abstract: Two of the canonical approaches in regional studies are global production networks (GPNs) and evolutionary economic geography (EEG). Recent geopolitical and economic events have shown the importance of both theories in explaining regional economic change. Yet they remain discrete and separate, and there is now consensus that, together, they could explain more. A vibrant debate on the relationship between these two approaches is needed, starting with identifying unifying themes and areas of analytical difference, to develop a research agenda for future work which can better explain regional change.
    Keywords: complexity; evolutionary economic geography; global production networks; global value chains; relatedness; T&F deal
    JEL: D00 F23
    Date: 2024–03–08
  2. By: Xiaoming Cai; Pieter Gautier; Ronald Wolthoff; Pieter A. Gautier
    Abstract: This paper considers a random search model where some locations provide sellers with better chances of meeting many buyers than other locations (for example popular shopping streets or the first page of a search engine). When sellers are heterogeneous in terms of the quality of their product and/or the probability that a given buyer likes their product, it is desirable that sellers of high-quality niche products sort into the best locations. We show that this does not always happen in a decentralized market. Finally, we allow for endogenous location distributions and show that more trades are realized when locations are similar (in which case the aggregate matching function is urn-ball) but that quality weighted trade can be higher when locations are heterogeneous.
    Keywords: search frictions, spatial equilibrium, sorting
    JEL: C78 D44 D83
    Date: 2024
  3. By: Grunau, Philipp; Hoffmann, Florian; Lemieux, Thomas; Titze, Mirko
    Abstract: We study the wage and employment effects of a German place-based policy using a research design that exploits conditionally exogenous EU-wide rules governing the program parameters at the regional level. The place-based program subsidi- zes investments to create jobs with a subsidy rate that varies across labor market regions. The analysis uses matched data on the universe of establishments and their employees, establishment-level panel data on program participation, and regional scores that generate spatial discontinuities in program eligibility and generosity. These rich data enable us to study the incidence of the place-based program on different groups of individuals. We find that the program helps establishments create jobs that disproportionately benefit younger and less-educated workers. Funded establishments increase their wages but, unlike employment, wage gains do not persist in the long run. Employment effects estimated at the local area level are slightly larger than establishment-level estimates, suggesting limited spillover effects. Using subsidy rates as an instrumental variable for actual subsidies indicates that it costs approximately EUR 25, 000 to create a new job in the economically disadvantaged areas targeted by the program.
    Keywords: local labor market, matched employer-employee data, place-based policies
    JEL: D04 H25 J21 J31 J61
    Date: 2024
  4. By: Borraz, Fernando; Carozzi, Felipe; Gonzalez Pampillon, Nicolas; Zipitría, Leandro
    Abstract: We study how local grocery markets within a city are affected by changes in housing markets. Our empirical strategy exploits a shift in the spatial distribution of construction activity induced by a large-scale, place-based tax exemption in the city of Montevideo. The introduction of new housing stock induced by the policy causes a reduction in grocery prices of 2.3 percent and an increase in locally available product varieties. Using insights from a multiproduct model of imperfect competition and estimates for different types of stores, we show these changes are the result of incumbents' response to an increase in local demand.
    Keywords: (JEL L81; O18; R22; R23; R31; R38)
    JEL: R31 R23 O18 L81 R22 R38
    Date: 2024–02–01
  5. By: Gold, Robert; Lehr, Jakob
    Abstract: This paper shows that regional policies can decrease populist support. We focus on the "development objective" (Objective-1) of the European Regional Development Fund (ERDF), meant to support lagging-behind regions. For causal inference, we exploit three sources of quasi-exogenous variation in a Regression-Discontinuity-Design (RDD), a Difference-in-Differences framework (DiD), and with matching techniques. Using NUTS3-level panel data on the outcomes of elections to the EU parliament, observed over the period 1999-2019, we consistently find that Objective-1 transfers reduces the vote share of right-fringe parties by about 2.5 pp. Left-fringe party support is not affected. Complementary analyses of individual-level survey data from the Eurobarometer show that the European Regional Policy increases trust in democratic institutions and decreases discontent with the EU.
    Keywords: Populism, Regional Policies, European Integration, Regression Discontinuity Design
    JEL: D72 H54 R11 R58
    Date: 2024
  6. By: Andrew Garin; Jonathan L. Rothbaum
    Abstract: This paper studies the long-run effects of government-led construction of manufacturing plants on the regions where they were built and on individuals from those regions. Specifically, we examine publicly financed plants built in dispersed locations outside of major urban centers for security reasons during the United States' industrial mobilization for World War II. Wartime plant construction had large and persistent impacts on local development, characterized by an expansion of relatively high-wage manufacturing employment throughout the postwar era. These benefits were shared by incumbent residents; we find men born before WWII in counties where plants were built earned $1, 200 (in 2020 dollars) or 2.5 percent more per year in adulthood relative to those born in counterfactual comparison regions, with larger benefits accruing to children of lower-income parents. The balance of evidence suggests that these individuals benefited primarily from the local expansion of higher-wage jobs to which they had access as adults, rather than because of developmental effects from exposure to better environments during childhood.
    JEL: H56 J31 J62 N42 R11 R53
    Date: 2024–03
  7. By: Emanuele Bacchiocchi; Andrea Bastianin; Graziano Moramarco
    Abstract: We estimate the short-run effects of severe weather shocks on local economic activity and assess cross-border spillovers operating through economic linkages between U.S. states. We measure weather shocks using a detailed county-level database on emergency declarations triggered by natural disasters and estimate their impacts with a monthly Global Vector Autoregressive (GVAR) model for the U.S. states. Impulse responses highlight significant country-wide macroeconomic effects of weather shocks hitting individual regions. We also show that (i) taking into account economic interconnections between states allows capturing much stronger spillover effects than those associated with mere spatial adjacency, (ii) geographical heterogeneity is critical for assessing country-wide effects of weather shocks, and (iii) network effects amplify the local impacts of these shocks.
    Date: 2024–03
  8. By: Suss, Joel; Kemeny, Tom; Connor, Dylan S.
    Abstract: Wealth inequality has been sharply rising in the United States and across many other high-income countries. Due to a lack of data, we know little about how this trend has unfolded across locations within countries. Examining the subnational geography of wealth is crucial because, from one generation to the next, it shapes the distribution of opportunity, disadvantage, and power across individuals and communities. By employing machine-learning-based imputation to link national historical surveys conducted by the U.S. Federal Reserve to population survey microdata, the data presented in this article addresses this gap. The Geographic Wealth Inequality Database (“GEOWEALTH-US”) provides the first estimates of the level and distribution of wealth at various geographical scales within the United States from 1960 to 2020. The GEOWEALTH-US database enables new lines of investigation into the contribution of spatial wealth disparities to major societal challenges including wealth concentration, income inequality, social mobility, housing unaffordability, and political polarization.
    JEL: N0
    Date: 2024–02–28

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