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on Economic Geography |
| By: | Atsuki Kotani |
| Abstract: | The technical change from steam engines to electric motors dramatically transformed manufacturing activities during the Second Industrial Revolution. This paper explores how this technical change progressed and what consequences it brought for the evolution of economic geography. I hypothesize that electric motors powered by purchased electricity lowered barriers to entry in the manufacturing sector due to their significantly lower fixed costs compared to steam engines. To examine this hypothesis, I exploit the historical expansion of electricity grids in early 20th-century Japan and newly digitized establishment-level official records, including information on power sources of establishments. Descriptive evidence shows that electric motors were widely adopted by establishments of all sizes, whereas steam engines were primarily adopted by large establishments, indicating lower fixed costs of electric motors. Using hydropower potential as an instrument, I document that new entrants played a crucial role in driving this technical change and stimulating manufacturing activities. Overall, these findings lend substantial support for the hypothesis. Furthermore, I find that regions with earlier electricity access experienced substantial population growth throughout the early 20th century and exhibit larger economic activity even in the 21st century. These findings suggest a persistent impact of this technological shock: the rapid increase in entrant activities generated agglomeration forces in manufacturing, with accumulated effects still visible in the spatial distribution of economic activity today. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:dpr:wpaper:1279 |
| By: | Anton Yang (Yale University); Jianwei Ai (Renmin University of China); Costas Arkolakis (Yale University) |
| Abstract: | We introduce a new methodology to detect and measure economic activity using geospatial data and apply it to steel production, a major industrial pollution source worldwide. Combining plant output data with geospatial data, such as ambient air pollutants, nighttime lights, and temperature, we train machine learning models to predict plant locations and output. We identify about 40% (70%) of plants missing from the training sample within a 1 km (5 km) radius and achieve R2 above 0.8 for output prediction at a 1 km grid and at the plant level, as well as for both regional and time series validations. Our approach can be adapted to other industries and regions, and used by policymakers and researchers to track and measure industrial activity in near real time. |
| Date: | 2025–04–03 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2435 |
| By: | Moritz Kuhn; Iourii Manovskii; Xincheng Qiu |
| Abstract: | Spatial differences in labor market performance are large and highly persistent. Using data from the United States, Germany, and the United Kingdom, we document striking similarities across these countries in the spatial differences in unemployment, vacancies, and job filling, finding, and separation rates. The novel facts on the geography of vacancies and job filling are instrumental in guiding and disciplining the development of a theory of local labor market performance. We find that a spatial version of a Diamond-Mortensen-Pissarides model with endogenous separations and on-the-job search quantitatively accounts for all the documented empirical regularities. The model also quanitatively rationalizes why differences in job-separation rates have primary importance in inducing differences in unemployment across space while changes in the job-finding rate are the main driver in unemployment fluctuations over the business cycle. |
| Keywords: | Local Labor Markets, Unemployment, Vacancies, Search and Matching |
| JEL: | J63 J64 E24 E32 R13 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2024_609 |
| By: | Daniel Fehrle (Kiel University, Department of Economics); Vasilij Konysev (University of Augsburg, Department of Economics) |
| Abstract: | German reunification in 1990 marked the first sudden integration of a socialist and capitalist economy. Despite East Germany’s (EG) economic catch-up with West Ger- many (WG), the integration remains unfinished, as indicated by per capita output in EG still being about one-third lower. To study this unfinished regional convergence, we apply wedge-growth accounting using a human capital-augmented, two-sector, two-region model, incorporating labor supply constraints to capture key qualitative differences between EG and WG. Our findings show that sectoral labor and capital wedges are similar within regions and have significantly converged between regions, with EG initially overusing inputs. While productivity in the nontradable goods sector has fully converged, the tradable sector in EG remains less productive than in WG. Counterfactual analysis suggests that this productivity gap, together with persistent net inflows to EG, explains EG’s lower economic activity. However, reducing the in- flows would result in significant welfare losses in EG. Furthermore, we account for the reunification event, identifying a substantial productivity catch-up in EG between 1989 and 1991. Our findings offer clear policy insights, highlighting the trade-offs between economic activity and fiscal transfers. |
| Keywords: | German reunification, Regional convergence, Wedge-growth accounting, Comparative inefficiencies |
| JEL: | E13 E24 N14 O11 O47 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:aug:augsbe:348 |
| By: | Giulio Cainelli (Department of Economics and Management "Marco Fanno", University of Padua); Carlo Ciccarelli (Department of Economics and Finance, University of Rome Tor Vergata, and CAGE Research Centre, Department of Economics, University of Warwick); Roberto Ganau (Department of Economics and Management "Marco Fanno", University of Padua, and Department of Geography and Environment, LSE) |
| Abstract: | We study how changes in the administrative hierarchy of a country affect development at the city level. We use the 1806 Napoleonic administrative reform implemented in the Kingdom of Naples as a historical experiment to assess whether district capitals with supra-municipal administrative functions enjoyed an urban development premium compared with non-capital cities. We find that district capitals recorded a population growth premium throughout the 19th century (1828–1911) and experienced higher industrialization than non-capital cities, both before and after the Italian unification. We explain our findings through mechanisms relating to public goods provision and transport network accessibility. |
| Keywords: | Napoleonic reforms; local administrative hierarchy; development |
| JEL: | H11 N13 O11 R11 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:bdi:workqs:qse_54 |
| By: | Ireri Hernandez Carballo; Gian Maria Mallarino; Marco Percoco |
| Keywords: | EU ETS, Carbon policies, CO2 Emissions, Regional Economics, Economic Geography |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:bcu:greewp:greenwp27 |