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on Economic Geography |
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Issue of 2024‒07‒29
eleven papers chosen by Andreas Koch, Institut für Angewandte Wirtschaftsforschung |
| By: | Richard Hornbeck; Guy Michaels; Ferdinand Rauch |
| Abstract: | We examine "agglomeration shadows" that emerge around large cities, which discourage some economic activities in nearby areas. Identifying agglomeration shadows is complicated, however, by endogenous city formation and "wave interference" that we show in simulations. We use the locations of ancient ports near the Mediterranean, which seeded modern cities, to estimate agglomeration shadows cast on nearby areas. We find that empirically, as in the simulations, detectable agglomeration shadows emerge for large cities around ancient ports. These patterns extend to modern city locations more generally and illustrate how encouraging growth in particular places can discourage growth of nearby areas. |
| Keywords: | agglomeration shadow, urban hierarchy, new economic geography |
| Date: | 2024–06–26 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2013&r= |
| By: | Croce, Giuseppe; Piselli, Paolo |
| Abstract: | The gap in the employment dynamics between larger urban areas and other areas has widened dramatically in recent decades in advanced economies. A proposed explanation for this trend argues that the technological change occurs with greater intensity in larger urban areas than in medium and small cities, since it interacts with the urban agglomeration forces. In particular, more qualified, better paid jobs are expected to grow more in larger cities. This work focuses on the dynamics of most paying jobs and their spatial distribution across different-size cities in Italy in the period between 1993 and 2016. We investigate whether their share has grown and whether its growth has actually been concentrated in the larger cities. Using Bank of Italy’s Survey of Household Income and Wealth (SHIW), we find that the share of most paying jobs has increased in aggregate but its growth in large cities was much weaker than in medium and small cities and even negative after 2008. We also estimate a probit IV model of the worker’s probability of being employed in a most paying job across cities. The results show that being in a bigger city does not increase the chances of getting a better paid job. Furthermore, a shift-share decomposition reveals that the weak growth of most paying jobs in larger cities is only partly explained by the sectoral shifts. Our evidence can be explained by the slow diffusion of new technologies in the Italian economy. Moreover, it is consistent with studies showing the poor performance of the largest urban economies in Italy. |
| Keywords: | employment change, technological change, most paying jobs, cities, local labour markets, agglomeration |
| JEL: | J24 J31 O14 O18 O33 R11 |
| Date: | 2024–06–18 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121228&r= |
| By: | I. Etzo; R. Paci; C. Usala |
| Abstract: | Our study examines the relationship between university student mobility and local economic dynamics. Universities are pivotal in shaping societies and economies as hubs of knowledge creation, innovation, and cultural exchange. While recent research underscores the significant impact of university students on local development, there is a notable gap in understanding the distinct effects of mobile versus resident students on the local economy. Using data from 90 NUTS3 provinces in Italy between 2013 and 2019, we investigate the spatial inequalities generated by student mobility. Our focus is on secondlevel university students, who are closer to entering the labor market and thus have a more immediate impact on the local economy. Employing a standard fixed effects growth model, our findings reveal that incoming students significantly boost the economic growth of the destination province, particularly in the Center-North regions (brain gain). Conversely, the southern provinces suffer reduced growth due to the loss of talented students (brain drain). Thus, student mobility exacerbates the enduring spatial disparities in Italy contributing to uneven economic development across regions. |
| Keywords: | spatial disparities;brain drain;mobile university students;growth model |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:cns:cnscwp:202411&r= |
| By: | F. Aresu; E. Marrocu; R. Paci |
| Abstract: | This paper investigates the economic impact of European Structural and Investment Funds (ESIF) for 262 EU NUTS2 regions over the period 2000-2019. Differently from previous contributions, we focus on the impact of ESIF on regional Total Factor Productivity (TFP) growth, which allowed us to account for other sources of regional investments. A relevant contribution of this study is the thorough examination of the effect of the four main funds included in ESIF on the productivity of a comprehensive set of EU regions. Results show the prevailing effectiveness of the European Regional Development Fund (ERDF), featuring a great deal of heterogeneity over time and across EU geographic areas. Moreover, by analyzing the role played by the European Agricultural Fund (EAFRD) on the TFP of the agricultural sector, we found that its growth impact crucially depends on the initial level of regional sectoral TFP. Our results contribute to a deeper understanding of ESIF economic impact and suggest policy implications for enhancing their contribution to regional economic development. |
| Keywords: | European Structural and Investment Funds;regional development;Spatial Error Model;European Union |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:cns:cnscwp:202412&r= |
| By: | Will Brett-Harding; Henry G. Overman |
| Abstract: | This briefing looks at the causes and consequences of UK spatial disparities and what, if anything, policy can do to address them. |
| Keywords: | Election 2024, Economic geography, Productivity, UK Economy, election2024 |
| Date: | 2024–06–20 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepeap:059&r= |
| By: | Schmitz, Tom; Colantone, Italo; Ottaviano, Gianmarco |
| Abstract: | This paper shows how to combine microeconometric evidence on the effects of environmental policy with a macroeconomic model, accounting for general equilibrium spillovers that have mostly been ignored in the literature. To this end, we study the effects of a recent US air pollution policy. We use regression evidence on the policy’s impact across industries and local labor markets to calibrate a quantitative spatial model allowing for general equilibrium spillovers. Our model implies that the policy lowered emissions by 11.1%, but destroyed approximately 250’000 jobs. Ignoring spillovers overestimates job losses in polluting industries, but underestimates job losses in clean industries. |
| Keywords: | Environmental Economics and Policy |
| Date: | 2024–06–18 |
| URL: | https://d.repec.org/n?u=RePEc:ags:feemwp:343507&r= |
| By: | Jorge Pérez Pérez; José G. Nuño-Ledesma |
| Abstract: | Between 2004 and 2018, the spread of wages in Mexico's private labor sector remained stable. Nonetheless, the underlying factors behind salary dispersion underwent significant shifts. To uncover these changes, we analyze an employer-employee dataset comprising the near-universe of Mexico's formal employment. We estimate log wage models and decompose earnings dispersions into worker, workplace and sorting components. At the national level, we find that sorting increased its importance over time. While worker-level factors were the main contributors to salary variability in the 2004-2008 period, workplace factors became as important as worker-level factors in the 2014-2018 time segment. The influence of workplace factors on wage dispersion correlates negatively with per capita GDP at the regional level. |
| Keywords: | Assortative matching;regional development;wage dispersion;workplace wage premia |
| JEL: | J21 J31 R23 O15 O54 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:bdm:wpaper:2024-06&r= |
| By: | Hanna Schwank |
| Abstract: | Natural disasters are growing in frequency globally. Understanding how vulnerable populations respond to these disasters is essential for effective policy response. This paper explores the short- and long-run consequences of the 1906 San Francisco Fire, one of the largest urban fires in American history. Using linked Census records, I follow residents of San Francisco and their children from 1900 to 1940. Historical records suggest that exogenous factors such as wind and the availability of water determined where the fire stopped. I implement a spatial regression discontinuity design across the boundary of the razed area to identify the effect of the fire on those who lost their home to it. I find that in the short run, the fire displaced affected residents, forced them into lower paying occupations and out of entrepreneurship. Experiencing the disaster disrupted children’s school attendance and led to an average loss of six months of education. While most effects attenuated over time, the negative effect on business ownership persists even in 1940, 34 years after the fire. Therefore, my findings reject the hope for a “reversal of fortune” for the victims, in contrast to what is found for more recent natural disasters such as hurricane Katrina. |
| Keywords: | Natural Disasters; Internal Migration; Economic History, Regional and Urban Economics |
| JEL: | N91 N31 Q54 O15 J61 J62 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2024_571&r= |
| By: | Nikhil Datta |
| Abstract: | This paper studies monopsony power in a low pay labour market and explores its determinants. I emphasise the role of the spatial distribution of activity and workers' distaste for commuting in generating imperfect substitutability between jobs, and heterogeneity in monopsony power. To formalise the role of commutes in generating monopsony power I develop a job search model where utility depends on wages, commutes and an idiosyncratic component. The model endogenously defines probabilistic spatial labour markets which are point specific and overlapping, and generates labour supply to the firm elasticities which vary across space. Distaste for commuting is shown to increase monopsony power, but does so heterogeneously, increasing monopsony power in rural areas more than in denser urban ones. Using detailed applicant data for a firm with hundreds of establishments across the UK, coupled with two sources of job-establishment level exogenous wage variation I estimate the model parameters and show that commutes generate considerable spatial heterogeneity in monopsony power and are responsible for approximately 1/3 of the total wage markdown. A decomposition exploiting the granularity of the model demonstrates that 40% of spatial variation in monopsony power is within Travel To Work Areas. Calculating employer concentration based on highly-granular 1km2 grids and probability of applying across grids based on pair-wise grid travel times shows how coarsely discretised labour markets such as Commuting Zones can cause sizeable mismeasurement in concentration measures. |
| Keywords: | monopsony |
| Date: | 2024–06–25 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2012&r= |
| By: | Batabyal, Amitrajeet; Kourtit, Karima; Nijkamp, Peter |
| Abstract: | We analyze economic growth in a stylized, high-tech region A with two key features. First, the residents of this region are high-tech because they possess skills. In the language of Richard Florida, these residents comprise the region’s creative class and they possess creative capital. Second, the region is high-tech because it uses an artificial intelligence (AI)-based technology and we model the use of this technology. In this setting, we first derive expressions for three growth metrics. Second, we use these metrics to show that the economy of A converges to a balanced growth path (BGP). Third, we compute the growth rate of output per effective creative capital unit on this BGP. Fourth, we study how heterogeneity in initial conditions influences outcomes on the BGP by introducing a second high-tech region B into the analysis. At time t=0, two key savings rates in A are twice as large as in B. We compute the ratio of the BGP value of income per effective creative capital unit in A to its value in B. Finally, we compute the ratio of the BGP value of skills per effective creative capital unit in A to its value in B. |
| Keywords: | Artificial Intelligence, Creative Capital, Regional Economic Growth, Skills |
| JEL: | O33 R11 |
| Date: | 2023–12–11 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121328&r= |
| By: | Subhankar Ghosh; Jayant Gupta; Arun Sharma; Shuai An; Shashi Shekhar |
| Abstract: | Given a set \emph{S} of spatial feature types, its feature instances, a study area, and a neighbor relationship, the goal is to find pairs $ $ such that \emph{C} is a statistically significant regional-colocation pattern in $r_{g}$. This problem is important for applications in various domains including ecology, economics, and sociology. The problem is computationally challenging due to the exponential number of regional colocation patterns and candidate regions. Previously, we proposed a miner \cite{10.1145/3557989.3566158} that finds statistically significant regional colocation patterns. However, the numerous simultaneous statistical inferences raise the risk of false discoveries (also known as the multiple comparisons problem) and carry a high computational cost. We propose a novel algorithm, namely, multiple comparisons regional colocation miner (MultComp-RCM) which uses a Bonferroni correction. Theoretical analysis, experimental evaluation, and case study results show that the proposed method reduces both the false discovery rate and computational cost. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.02536&r= |