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on Economic Geography |
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Issue of 2025–03–10
thirteen papers chosen by Andreas Koch, Institut für Angewandte Wirtschaftsforschung |
| By: | Hornbeck, Richard; Michaels, Guy; Rauch, Ferdinand |
| 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 |
| JEL: | R12 N9 |
| Date: | 2024–06–26 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126770 |
| By: | Takeda, Kohei; Yamagishi, Atsushi |
| Abstract: | We provide new theory and evidence on the resilience of internal city structure after a large shock, analyzing the atomic bombing of Hiroshima. Exploiting newly digitized data, we document that the city structure recovered within five years after the bombing. Our new dynamic quantitative model of internal city structure incorporates commuting, forward-looking location choices, migration frictions, agglomeration forces, and heterogeneous location fundamentals. Strong agglomeration forces in our estimated model explain Hiroshima's recovery, and we find an alternative equilibrium where the city center did not recover. These results highlight the role of agglomeration forces, multiple equilibria, and expectations in urban dynamics. |
| Keywords: | agglomeration; history; expectations; atomic bombing; spatial dynamics |
| JEL: | C73 N45 O18 R12 R23 |
| Date: | 2024–04–12 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126823 |
| By: | Redding, Stephen J.; Sturm, Daniel |
| Abstract: | We use the German bombing of London during the Second World War as an exogenous source of variation to provide evidence on neighborhood effects. We construct a newly-digitized dataset at the level of individual buildings on wartime destruction, property values, and socioeconomic composition in London before and after the Second World War. We develop a quantitative spatial model, in which heterogeneous groups of individuals endogenously sort across locations in response to differences in natural advantages, wartime destruction and neighborhood effects. We find substantial and highly localized neighborhood effects, which magnify the direct impact of wartime destruction, and make a substantial contribution to observed patterns of spatial sorting across locations. |
| Keywords: | agglomeration; neighborhood effects; second world war; spatial sorting |
| JEL: | F16 N9 R23 |
| Date: | 2024–04–09 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126825 |
| By: | Stephen J. Redding |
| Abstract: | The recent development of quantitative urban models provides a new set of tools for evaluating transport improvements. Conventional cost-benefit analyses are typically undertaken in partial equilibrium. In contrast, quantitative urban models characterize the spatial distribution of economic activity within cities in general equilibrium. We compare evaluations of a transport improvement using conventional cost-benefit analysis, sufficient statistics approaches based on changes in market access, and model-based counterfactuals. We show that quantitative urban models predict a reorganization of economic activity within cities in response to a transport improvement, which can lead to substantial differences between the predictions of these three approaches for large changes in transport costs. |
| Keywords: | transportation, spatial economics, urban economics |
| Date: | 2025–02–26 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2080 |
| By: | Schmitz, Tom; Colantone, Italo; Ottaviano, Gianmarco I. P. |
| 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 policy; employment; trade; clean air act |
| JEL: | E24 Q50 Q53 |
| Date: | 2024–07–09 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126761 |
| By: | Gordon H. Hanson; Dani Rodrik; Rohan Sandhu |
| Abstract: | Place-based policy in the United States comprises a wide range of government programs that are spread across federal, state, and local agencies and that rely on public, private, and nonprofit organizations for policy design and implementation. We document how loosely connected vertical policy supply chains distribute resources from federal and state governments to recipients at the local level. The apparatus is the product of 150 years of policy innovation, both from the top down, with the federal government periodically launching major initiatives whose place-based impacts tend to be long-lived (even if the specific policies are not), and from the bottom up, with state and local actors engineering their own policy solutions, many of which have endured and now constitute modern policy practice. That practice includes not just tax incentives for business investment, the subject of most economic research on place-based policy, but support for community redevelopment, workforce development, small business promotion, technological innovation, and regional planning and strategy. Intermediary organizations that connect government agencies to local recipients are central to resource delivery. Because they tend to be created, funded, and (or) run by non-state actors, there appears to be wide geographic variation in organizational capacity for place-based policy. Understanding the causes and consequences of that variation is needed for a full accounting of how place-based policy works in the U.S. |
| JEL: | F66 H71 R10 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33511 |
| By: | Rodríguez-Pose, Andrés; Bartalucci, Federico; Nancy Lozano Gracia; Maria Davalos |
| Abstract: | Territorial development theory and practice have witnessed significant change in recent times. This change has increasingly put the spatial dimension at the center of development policies. Although agglomeration-focused policies derived from urbanization and agglomeration economics were once prominent, their empirical limitations have become increasingly apparent. Greater territorial polarization and pervasive left-behindedness have underscored the need for a more inclusive territorial development approach, prompting increased interest in understanding and addressing regional disparities to ensure more equitable economic growth. This paper synthesizes the growing interest in territorial development, which has driven the adoption of what are increasingly place-based and place-sensitive approaches to development. The paper also emphasizes the need for complementarity between efficiency-driven and equity-focused interventions, while highlighting emerging topics in regional economics research, including the role of institutions, agency, and external megatrends such as the green transition. The paper concludes by advocating a place-sensitive approach that tailors policies to regional challenges, promoting economic potential, diversification, and inclusivity across all regions. |
| Date: | 2024–03–27 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10734 |
| By: | Esteban Rossi-Hansberg; Jialing Zhang |
| Abstract: | We use high-resolution spatial data to build a novel global annual gridded GDP dataset at 1°, 0.5°, and 0.25° resolutions from 2012 onward. Our random forest model trained on local and national GDP achieves an R² above 0.92 for GDP levels and above 0.62 for annual changes in regions left out of the training sample. By incorporating diverse indicators beyond population and nighttime lights, our estimates offer more precise subnational GDP measurements for analyzing economic shocks, local policies, and regional disparities. We evaluate the precision of our estimates with a sample case of COVID-19’s impact on local GDP in China. |
| JEL: | E0 F0 R0 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33458 |
| By: | Alex Trew; Stephan Heblich; ​Yanos Zylberberg; Dávid Nagy |
| Abstract: | This paper studies how cities’ industrial structure shapes their life and death. Our analysis exploits the large heterogeneity in the early composition of English and Welsh cities. We extract built-up clusters from early historical maps, identify settlements at the onset of the nineteenth century, and isolate exogenous variation in the nature of their rise during the transformation of the economy by the end of the nineteenth century. We then estimate the causal impact of cities’ population and industrial specialization on their later dynamics. We find that cities specializing in a small number of industries decline in the long run. We develop a dynamic spatial model of cities to isolate the forces which govern their life and death. Intratemporally, the model captures the role of amenities, land, local productivity and trade in explaining the distribution of economic activity across industries and cities. Intertemporally, the model can disentangle the role of aggregate industry dynamics from city-specific externalities. We find that the long-run dynamics of English and Welsh cities is explained to a large extent by such dynamic externalities `a la Jacobs. |
| Keywords: | quantitative economic geography, specialization, cities over time |
| JEL: | F63 N93 O14 R13 |
| Date: | 2023–07 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1398 |
| By: | Jolevski, Filip; Nayyar, Gaurav; Pleninger, Regina; Shu Yu |
| Abstract: | This paper examines spillovers in the use of digital technologies from formal to informal businesses by exploring differences in geographic proximity. Using a unique set of geocoded data from the 2019 World Bank Enterprise Surveys in Zambia, the findings indicate that closer geographic proximity to formal firms is associated with a significantly higher likelihood of digital adoption by informal businesses. The finding holds for various types of digital technologies, ranging from computers, tablets, and cell phones to mobile money transactions, and is robust to various measures of geographic proximity and model modifications. The results vary by the owner’s level of education and business age. The results also suggest that the spillovers in information and communications technology use can be explained by competition in the local market and learning through enhanced interactions. |
| Date: | 2024–04–23 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10757 |
| By: | Peng, Cong; Wang, Yao; Chen, Wenfan |
| Abstract: | This study explores the impacts of road improvements in a country characterized by "urbanization without growth". Our analysis reveals that, although road upgrades increase population growth, they do not significantly advance economic development and tend to worsen living conditions. Utilizing a combination of empirical evidence and a spatial equilibrium model, we identify that constrained industrial capacities and congestion from high population density limit the efficacy of road development policies in enhancing GDP and overall welfare. Our results also indicate that strategically targeting road placement in regions with higher economic productivity could yield better economic outcomes. |
| Keywords: | road improvements; urbanization; industrialization; quantitative spatial model; satellite imagery; africa |
| JEL: | O1 R1 R4 |
| Date: | 2024–12–12 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126771 |
| By: | Todd Gardner |
| Abstract: | In the middle of the twentieth century, the Bureau of the Budget, in conjunction with the Census Bureau and other federal statistical agencies, introduced a widely used unit of statistical geography, the county-based Standard Metropolitan Area. Metropolitan definitions since then have been generally regarded as comparable, but methodological changes have resulted in comparability issues, particularly among the largest and most complex metro areas. With the 2000 census came an effort to simplify the rules for defining metro areas. This study attempts to gather all available historical geographic and commuting data to apply the current rules for defining metro areas to create comparable statistical geography covering the period from 1940 to 2020. The changes that accompanied the 2000 census also brought a new category, "Micropolitan Statistical Areas, " which established a metro hierarchy. This research expands on this approach, using a more elaborate hierarchy based on the size of urban cores. The areas as delineated in this paper provide a consistent set of statistical geography that can be used in a wide variety of applications. |
| Keywords: | metropolitan, micropolitan, statistical geography, methodology |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-10 |
| By: | João Francisco Sarno Carvalho (Cedeplar/UFMG) |
| Abstract: | This study aimed to analyze the transformations that have occurred in the regional innovation system of Minas Gerais over the past 20 years. To achieve this objective, the research was structured in three stages: (a) mapping the main agents of the innovation system of Minas Gerais; (b) describing the changes that have occurred in these agents over the past two decades; and (c) identifying the new agents that have emerged during this period. The methodological approach adopted is qualitative and descriptive in nature. To meet the proposed objectives, research was conducted based on secondary data from official databases. Data analysis was conducted using Microsoft Excel software and the Philcarto tool for generating maps, focusing on a descriptive approach. The results obtained indicate transformations of an economic, political and social nature, which aim to consolidate and achieve maturity of the innovation system in Minas Gerais. The evidence presented contributes to a deeper understanding of the role and particularities of the Minas Gerais Innovation System, offering important subsidies for the formulation of public and private policies aimed at Technological Innovation in the state. |
| Keywords: | Regional Innovation System. Minas Gerais Innovation System. Technological Innovation. |
| JEL: | O38 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:cdp:texdis:td679 |