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on Economic Geography |
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Issue of 2025–02–24
eight papers chosen by Andreas Koch, Institut für Angewandte Wirtschaftsforschung |
| By: | Treb Allen; Costas Arkolakis |
| Abstract: | This handbook chapter presents the major advances made in the field of economic geography over the past decade. It starts by documenting a number of motivating empirical facts. It then shows how a quantitative regional model that combines the insights from two seminal models from an earlier generation can explain these facts. It then presents a unified quantitative framework that incorporates this and many other economic geography models. This unified framework is sufficiently tractable to characterize its equilibrium properties while flexible enough to be combined with detailed spatial economic data to estimate the model parameters, conduct counterfactuals, and perform welfare analysis. The chapter concludes by discussing many extensions of the framework, some of which have already been explored and others which have not. |
| JEL: | F1 R1 R3 R4 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33436 |
| By: | Dimitria Freitas |
| Abstract: | Increasing within-country disparities have led policymakers to deploy public employment reallocation as a place-based policy tool to support struggling regions. This paper surveys the economics literature on capital relocations, purpose-built capitals, and public agency decentralization programs, synthesizing their effects on population, employment, and GDP. I find that while relocating capital cities can spur employment, GDP, and population growth in receiving regions, they entail highly unpredictable costs (3–12% of GDP) and uncertain environmental outcomes. Decentralization programs yield positive short-run public-to-private employment multipliers (around 0.7) stemming from the non-traded sector, but the long-term effect on the traded sector remains ambiguous. Local initial conditions seem to matter more than ex-post spillovers in determining multiplier size. Although more evidence is needed, sending regions do not seem to be extensively harmed when public jobs leave. Given the large share of government payroll in national expenditures, reallocating public employment may hold considerable potential for regional development in the future. |
| JEL: | H7 J45 R11 R58 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33432 |
| By: | Andrew Garin |
| Abstract: | Place-based industrial interventions—policies that promote production and investment in specific regions—are often proposed with the intent of improving economic conditions for residents, particularly "left-behind" workers in distressed local labor markets. This chapter discusses the theoretical rationale for the use of industrial interventions to achieve distributional goals and evidence about their effectiveness to that end. I use government-funded plant construction during World War II (WWII) in the United States as a focal case study, which I then compare and contrast to other industrial interventions studied in the literature. While government plant construction during WWII drove an expansion of high-wage semi-skilled jobs open to local residents, which in turn fueled an increase in upward mobility among local residents, the evidence from more recent interventions suggests that modern plant sitings often fail to yield similar benefits to local workers. The implementation details of industrial interventions matter crucially for their incidence on local workers. Interventions that generate opportunities for up-skilling and occupational advancement accessible to target populations appear to be most likely to generate meaningful distributional benefits. I argue that while core production goals during WWII happened to inherently align with the promotion of upward mobility, such alignment is not guaranteed in general and may be the exception rather than the rule in modern contexts. |
| JEL: | H54 J31 J62 N61 O25 R11 R53 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33418 |
| By: | David H. Autor; David Dorn; Gordon Hanson; Maggie R. Jones; Bradley Setzler |
| Abstract: | This chapter analyzes the distinct adjustment paths of U.S. labor markets (places) and U.S. workers (people) to increased Chinese import competition during the 2000s. Using comprehensive register data for 2000–2019, we document that employment levels more than fully rebound in trade-exposed places after 2010, while employment-to-population ratios remain depressed and manufacturing employment further atrophies. The adjustment of places to trade shocks is generational: affected areas recover primarily by adding workers to non-manufacturing who were below working age when the shock occurred. Entrants are disproportionately native-born Hispanics, foreign-born immigrants, women, and the college-educated, who find employment in relatively low-wage service sectors such as medical services, education, retail, and hospitality. Using the panel structure of the employer-employee data, we decompose changes in the employment composition of places into trade-induced shifts in the gross flows of people across sectors, locations, and non-employment status. Contrary to standard models, trade shocks reduce geographic mobility, with both in- and out-migration remaining depressed through 2019. The employment recovery stems almost entirely from young adults and foreign-born immigrants taking their first U.S. jobs in affected areas, with minimal contributions from cross-sector transitions of former manufacturing workers. Although worker inflows into non-manufacturing more than fully offset manufacturing employment losses in trade-exposed locations after 2010, incumbent workers neither fully recover earnings losses nor predominantly exit the labor market, but rather age in place as communities undergo rapid demographic and industrial transitions. |
| Keywords: | sectoral reallocation; worker mobility; China trade shock; Local labor markets; Manufacturing decline |
| JEL: | J62 F16 J23 R12 L60 J31 |
| Date: | 2025–02–11 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedmoi:99548 |
| By: | Boschma, Ron; Hernández-Rodríguez, Eduardo; Morrison, Andrea; Pietrobelli, Carlo (RS: GSBE other - not theme-related research, Mt Economic Research Inst on Innov/Techn) |
| Abstract: | This paper combines insights from the literatures on Global Value Chains (GVC), Economic Complexity and Evolutionary Economic Geography to assess the role of GVC participation and regional capabilities in fostering economic complexity in EU NUTS-2 regions. Our results suggest there is no such thing as a common path towards economic complexity across EU regions. Low-income regions manage to benefit from both regional capabilities and GVC participation. In contrast, high-income regions rely more on their existing local capabilities rather than on GVC participation. |
| JEL: | B52 F23 O19 O33 R10 |
| Date: | 2025–01–29 |
| URL: | https://d.repec.org/n?u=RePEc:unm:unumer:2025002 |
| By: | Raouf Boucekkine (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Carmen Camacho (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Weihua Ruan (Purdue University [West Lafayette]) |
| Abstract: | We use Ekeland's variational principle together with Pontryagin's maximum principle to solve an optimal spatiotemporal economic growth model with a state constraint (no-negative capital stock) where capital law of motion follows a diffusion equation. We obtain the set of necessary optimal conditions for the solution to meet the state constraints for all time and locations. The maximum principle allows to reduce the infinite-horizon optimal control problem into a finite-horizon one ultimately leading to prove the uniqueness of the optimal solution with positive capital, and non-existence of the optimal solution with eventually strictly positive capital when the time discount rate is too large or too small. |
| Keywords: | Diffusion and growth, Optimal Control, State constraint, Ekeland's variational principle, Pontryagin's maximum principle |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:hal:psewpa:halshs-04630098 |
| By: | Gustave Kenedi (Institut d'Études Politiques [IEP] - Paris); Louis Sirugue (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | We provide new estimates of intergenerational income mobility in France for children born in the 1970s using rich administrative data. Since parents' incomes are not observed, we employ a two-sample two-stage least squares estimation. We show, using the Panel Study of Income Dynamics, that this method slightly underestimates rank-based measures of intergenerational persistence. Our results suggest France is characterized by a strong persistence relative to other developed countries. 9.7% of children born to parents in the bottom 20% reach the top 20% in adulthood, four times less than children from the top 20%. We uncover substantial spatial variations in intergenerational mobility across departments, and a positive relationship between geographic mobility and intergenerational upward mobility. The expected income rank of individuals from the bottom of the parent income distribution who moved towards high-income departments is around the same as the expected income rank of individuals from the 75 th percentile who stayed in their childhood department. |
| Keywords: | Intergenerational mobility, Geographic mobility, Spatial variations |
| Date: | 2023–12 |
| URL: | https://d.repec.org/n?u=RePEc:hal:psewpa:halshs-04423899 |
| By: | Becker, Sascha O. (University of Warwick); Boll, P. David (University of Warwick); Voth, Hans-Joachim (University of Zurich) |
| Abstract: | Spatial unit roots can lead to spurious regression results. We present a brief overview of the methods developed in Müller and Watson (2024) to test for and correct for spatial unit roots. We also introduce a suite of Stata commands (-spur-) implementing these techniques. Our commands exactly replicate results in Müller and Watson (2024) using the same Chetty et al. (2014) data. We present a brief practitioner’s guide for applied researchers. |
| Keywords: | spurious spatial regression, spatial unit roots, spurtest, spurtransform |
| JEL: | C21 C22 C52 C87 N0 P0 R12 R15 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17651 |