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on Economic Geography |
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Issue of 2024‒06‒24
twelve papers chosen by Andreas Koch, Institut für Angewandte Wirtschaftsforschung |
| By: | Bathelt, Harald; Buchholz, Maximilian; Storper, Michael |
| Abstract: | Social scientists and policymakers alike have become increasingly concerned with understanding the nature, causes, and consequences of inter-regional inequality in economic living conditions. Contemporary spatial inequality is multi-faceted—it varies depending on how we define inequality, the scale at which it is measured, and which groups in the labor force are considered. Increasing economic inequality has important implications for broader social and political issues. Notably, it is difficult to account for the rise of far-right populism in industrialized countries without considering the context of growing inter-regional inequality. Important explanations for the rise in inter-regional inequality include changing patterns of worker and firm sorting processes across space, major transitions like the reorientation of the economy from manufacturing to digital technologies, and increasing global economic integration, as well as policy. Different causal explanations in turn imply a different role for place-based policy. This article introduces the context of the special issue on the nature, causes, and consequences of inter-regional inequality, focusing specifically on inequality in North America and Western Europe, and aims to identify challenges for, and spark further research on, inter-regional inequality. |
| Keywords: | global economic integration; inter-regional connectivity; inter-regional inequality; place-based policies; political polarization; sorting across space |
| JEL: | D63 D72 D83 F21 O18 R11 |
| Date: | 2024–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:123014&r= |
| By: | Schröpf, Benedikt; Kovalenko, Tim |
| Abstract: | Although domestic establishment relocations are part of both the factor reallocation across regions and establishment dynamics within an economy, evidence on firm mobility in Germany is rather scarce. In this study, we therefore examine establishment- and regional-level patterns of firm mobility in Germany. Using rich administrative data, we document that most relocation flows go from major cities to the surrounding urban districts, suggesting sub-urbanization patterns. In terms of establishment-level characteristics, we document that middle-sized and knowledge-intensive establishments exhibit high relocation propensities. Further, establishments moving to major cities or urban districts are rather high-wage establishments while establishments moving to rural districts are rather low-wage establishments. Our regional analyses reveal that relocating establishments prefer nearby regions with (compared to their old locations) low tax burdens and low population densities. |
| Keywords: | Firm mobility, Establishment Relocation, Firm Location, Germany |
| JEL: | R10 R12 R30 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:iwqwdp:296487&r= |
| By: | Tobias Koenig; Thomas Brenner; ; |
| Abstract: | The evolution of industrial clusters has received much attention in the recent literature on evolutionary economic geography (EEG) and regional science. However, scientific results on the influence of different factors on the decline or renewal of mature industrial clusters are scarce. Therefore, this study identifies different factors: preconditions, triggering events and self-augmenting processes, and examines their influence on declining or renewing industrial clusters. In order to obtain transferable results, this meta-analysis is based on 69 individual empirical case studies from different countries and industries. The empirical results show, firstly, that the decline and renewal of industrial clusters is driven by different preconditions, triggering events and self-augmenting processes. Secondly, these factors change over time and may have both positive and negative dimensions. Finally, the decline of industrial clusters is more often associated with unfavorable preconditions and triggering events, while self- augmenting processes are more often found in the context of cluster renewal. |
| Keywords: | Cluster; Evolution; Decline; Renewal; Meta-analysis |
| JEL: | O33 R10 R11 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2418&r= |
| By: | Anna Stansbury (Peterson Institute for International Economics); Dan Turner (Centre for Progressive Policy); Ed Balls (King's College London and Harvard Kennedy School) |
| Abstract: | This paper analyzes binding constraints to productivity growth in the United Kingdom's regions outside London and the greater South East. These analyses challenge a number of common arguments about the UK's regional economic inequality problem. The authors find little evidence consistent with the hypotheses (i) that low shares of university graduates remain the primary constraint on growth for the UK's regions; (ii) that there is a generalized issue with access to finance for firms outside the South East; or (iii) that low or falling regional migration rates are to blame for the persistence of the UK's regional economic inequalities. Instead, they find evidence consistent with (i) a specific relative shortage of STEM degrees; (ii) binding transport infrastructure constraints within major non-London conurbations; (iii) a failure of public innovation policy to support clusters beyond the South East, in particular through the regional distribution of public support for research and development (R and D); and (iv) missed opportunities for higher internal mobility due to London's overheating housing market. The authors also find some suggestive evidence consistent with constraints on access to early-stage equity financing for high growth-potential small and medium-sized enterprises in certain regions. |
| JEL: | O47 R12 R58 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:iie:wpaper:wp24-12&r= |
| By: | Amendolagine, Vito; Crescenzi, Riccardo; Rabellotti, Roberta |
| Abstract: | This paper investigates how institutional conditions at national and regional levels shape the decisions of Multinational Enterprises (MNEs) to invest abroad by means of either acquisitions or greenfield investments. The empirical analysis covers all Foreign Direct Investment (FDI) projects in the European Union by the largest MNEs in the world to study alternative choices by the same firm and account for firm-level characteristics in investment decisions. The empirical results show that - other things being equal - regions with stronger investment eco-systems are more likely to attract acquisitions, while greenfield investments are more likely in regions with comparatively weaker systemic conditions. Howerver, the regional quality of institutions makes a fundamental difference to the nature of the investment projects attracted by regions: those with high quality of government can attract greenfield investments undertaken by the most productive MNEs. By improving their quality of government, local and regional policy makers can attract higher quality greenfield investment projects to their constituencies, potentially breaking the vicious circle between low productivity areas and low productivity FDI. |
| Keywords: | foreign direct investment; greenfield investment; cross-border acquisitions; multinational enterprises; firm heterogeneity; regions; European Union; institutions; European Union Horizon 2020 Programme H2020/2014-2020 (Grant Agreement n 639633-MASSIVE-ERC-2014-STG).; Wiley deal |
| JEL: | R12 R58 F23 |
| Date: | 2024–05–13 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:122662&r= |
| By: | Roskruge, Matthew (Massey University); Poot, Jacques (University of Waikato) |
| Abstract: | In this paper, we present evidence from quantitative research over the last decade on how the social capital of individuals in Aotearoa New Zealand is associated with birthplace and, for migrants, years since migration. We also consider the effects of spatial sorting and ethnic diversity on social capital formation. Aotearoa New Zealand has one of the highest rates of immigration in the OECD and, consequently, one of the highest shares of foreign-born individuals in the population. Additionally, the population is characterized by high ethnic diversity and a large indigenous population, with Māori representing 17 percent of the population. Using several data sources, we measure social capital by focusing on participation and volunteering in a range of community activities, perceptions of safety and inclusion, and voting in elections. Regression modelling shows that, as expected, migrants have little local social capital upon arrival. However, differences between their social capital and that of native-born individuals reduce considerably as the duration of residence in Aotearoa New Zealand increases. When the migrant share in a region is larger than the national average, migrants invest less in bridging social capital. Migrant clustering within a region increases their investment in bonding social capital. Bridging activities are associated with better employment outcomes. Less than one in five respondents in the utilized survey data report discrimination, and for migrants, discrimination declines with years of residence. However, the trend in discrimination has been upward over time and particularly affects non-European migrants and persons identifying with Māori and Pacific Peoples ethnicities. Residential location matters. Greater ethnic diversity is associated with the perception of a less safe neighbourhood, but individuals in ethnically diverse regions experience relatively less discrimination. Additionally, there is more involvement in elections in such regions. In contrast, greater ethnic polarisation in regions is associated with less civic engagement and more discrimination. |
| Keywords: | social capital, ethnic diversity, bonding, bridging, linking, immigrant integration, spatial sorting |
| JEL: | F22 R11 Z13 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp17012&r= |
| By: | Miguel Atienza; Marcelo Lufin; Moritz Breul; |
| Abstract: | New industrial paths do not necessarily translate into regional economic development. This study focuses on how asset mobilization for new industrial paths contributes to economic development. We analyze the mining service supplier industry in Antofagasta (Chile) from 1974 to 2021 and how changing human capital mobilization affected regional development opportunities. The declining territorial embeddedness of mining-related workers through long-distance commuting has weakened the mechanisms that translate path development into regional economic development. The study highlights the value of a multi-scalar focus on asset mobilization processes to improve our understanding of what kind of regional development is generated by new paths. |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:2417&r= |
| By: | Sandor Juhasz; Zoltan Elekes; Virag Ilyes; Frank Neffke |
| Abstract: | Strong local clusters help firms compete on global markets. One explanation for this is that firms benefit from locating close to their suppliers and customers. However, the emergence of global supply chains shows that physical proximity is not necessarily a prerequisite to successfully manage customer-supplier relations anymore. This raises the question when firms need to colocate in value chains and when they can coordinate over longer distances. We hypothesize that one important aspect is the extent to which supply chain partners exchange not just goods but also know-how. To test this, we build on an expanding literature that studies the drivers of industrial coagglomeration to analyze when supply chain connections lead firms to colocation. We exploit detailed micro-data for the Hungarian economy between 2015 and 2017, linking firm registries, employer-employee matched data and firm-to-firm transaction data from value-added tax records. This allows us to observe colocation, labor flows and value chain connec- tions at the level of firms, as well as construct aggregated coagglomeration patterns, skill relatedness and input-output connections between pairs of industries. We show that supply chains are more likely to support coagglomeration when the industries in- volved are also skill related. That is, input-output and labor market channels reinforce each other, but supplier connections only matter for colocation when industries have similar labor requirements, suggesting that they employ similar types of know-how. We corroborate this finding by analyzing the interactions between firms, showing that supplier relations are more geographically constrained between companies that operate in skill related industries. |
| Keywords: | coagglomeration, labor flow network, skill relatedness, supply chain |
| JEL: | R12 J24 O14 D57 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:2416&r= |
| By: | Miriam Fritzsche |
| Abstract: | Across industrialized countries, regional disparities in labor market outcomes and income have increased in recent decades. This paper investigates how one of the largest localized labor demand shocks tied to the beginning of de-industrialization- the decline of the mining industry between 1960 and 2010 - affects labor market outcomes in the long run. The analysis relies on a new panel data set based on digitized census records from Belgium, France, the UK, and Germany that allows to trace labor market adjustments over 60 years for the male and female working-age population separately. For the causal estimation, I use an IV-shift share approach that exploits exogenous variation in the shifts induced by increased seaborne trade of energy substitutes and the share given by geological rock strata to predict mining activity. The male population disproportionately suffered under this (early) de-industrialization shock and the subsequent job loss. For the male population, the employment-population ratio has not yet recovered resulting in persistent local joblessness. In contrast, the female working-age population experienced a strong catch-up in employment and participation. I find that at the aggregate level, a substantial, albeit time-lagged population response paired with a strong increase in female participation rates fully compensate for the loss of male jobs over the decades. As a consequence, the male-female employment gap shrinks over time. |
| Keywords: | Structural change, local labor markets, regional disparities |
| Date: | 2024–05–14 |
| URL: | http://d.repec.org/n?u=RePEc:bdp:dpaper:0040&r= |
| By: | Sarra Ben Yahmed; Francesco Berlingieri; Eduard Brüll |
| Abstract: | We show that digital capital and working from home were essential for the resilience of local labour markets in the context of the COVID-19 crisis in Germany. Employment responses differed widely across local labour markets, with differences in short-time work rates of up to 30 percentage points at the beginning of the pandemic. Using recent advancements in the difference-in-differences approach with a continuous treatment, we find that pre-crisis digital capital potential reduced short-time work rate by up to 3 percentage points. The effect was nonlinear, disproportionately disadvantaging regions at the lower end of the digital capital distribution for a longer period. One channel of impact is working from home, which was more often adopted in regions with higher digital capital. But digital capital smoothed the employment shock beyond the effect of remote work. |
| Keywords: | Covid-19, crisis, digitalisation, employment, information and communication technologies, local labour markets, resilience, short-time work, working from home |
| JEL: | J21 O30 R12 R23 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11114&r= |
| By: | Jan K. Brueckner |
| Abstract: | This paper analyzes the urban impacts of hybrid WFH in the simplest possible model, relying on Leontief utility and production functions and other simplifying assumptions. The analysis shows that introduction of WFH raises both the wage and land consumption of households while shrinking the size of the business district and reducing business land rent. When WFH requires home work-space, the city’s overall spatial size increases, with residential rents rising in the suburbs while falling near the center. The decline in business rent and the rotation of the residential rent contour match empirical evidence showing that WFH reduces office-building values and flattens the residential rent gradient. |
| Keywords: | work from home, cities, commuting, land rents, productivity |
| JEL: | R14 R31 J01 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11121&r= |
| By: | Coskun, Sena (Institute for Employment Research (IAB), Nuremberg, Germany); Dauth, Wolfgang (Institute for Employment Research (IAB), Nuremberg, Germany); Gartner, Hermann (Institute for Employment Research (IAB), Nuremberg, Germany); Stops, Michael (Institute for Employment Research (IAB), Nuremberg, Germany); Weber, Enzo (Institute for Employment Research (IAB), Nuremberg, Germany ; Univ. Regensburg) |
| Abstract: | "This paper examines how the shift towards working from home during and after the Covid-19 pandemic shapes the way how labor market and locality choices interact. For our analysis, we combine large administrative data on employment biographies in Germany and a new working from home potential indicator based on comprehensive data on working conditions across occupations. We find that in the wake of the Covid-19 pandemic, the distance between workplace and residence has increased more strongly for workers in occupations that can be done from home: The association of working from home potential and work-home distance increased significantly since 2021 as compared to a stable pattern before. The effect is much larger for new jobs, suggesting that people match to jobs with high working from home potential that are further away than before the pandemic. Most of this effect stems from jobs in big cities, which indicates that working from home alleviates constraints by tight housing markets. We find no significant evidence that commuting patterns changed more strongly for women than for men." (Author's abstract, IAB-Doku) ((en)) |
| Keywords: | Bundesrepublik Deutschland ; Pandemie ; IAB-Open-Access-Publikation ; Auswirkungen ; Berufsgruppe ; Entwicklung ; geschlechtsspezifische Faktoren ; abhängig Beschäftigte ; Integrierte Erwerbsbiografien ; Integrierte Erwerbsbiografien ; Pendelwanderung ; regionale Verteilung ; regionaler Arbeitsmarkt ; Stadtregion ; Telearbeit ; Wohnsituation ; Arbeitsplatzwechsel ; Arbeitsweg ; 2016-2022 |
| JEL: | J61 R23 |
| Date: | 2024–04–12 |
| URL: | https://d.repec.org/n?u=RePEc:iab:iabdpa:202406&r= |