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on Economic Geography |
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Issue of 2026–09–14
thirteen papers chosen by Andreas Koch, Institut für Angewandte Wirtschaftsforschung |
| By: | Pedro Henrique Gonçalves da Silva Napoli de Lima; Bruno Brandão Fischer; Ron Boschma; Gustavo Hermínio Salati Marcondes de Moraes |
| Abstract: | Why do some urban regions sustain a much broader range of economic activities than others? Evolutionary Economic Geography (EEG) has answered this question mainly through the principle of relatedness, in which urban scale has been treated as a control variable. Doing so, it has paid little attention to regional urban scale as a structural determinant of sectoral diversity. . We address this gap by combining the urban scaling tradition with EEG's capability-theoretic framework. Our study explores the relationship between sectoral diversity, urban size, and regional capabilities for US metropolitan statistical areas (MSAs) over the period 2012–2023. Three findings emerge. First, sectoral diversity scales logarithmically with population and the relationship is temporally stable across the panel — what we call the saturation principle: urban scale defines a diminishing-returns frontier for sectoral breadth. Second, regional capabilities (proxied by the Economic Complexity Index) are associated with deviations from this frontier and with the technological intensity of newly entered sectors. Third, urban scale conditions these capability effects asymmetrically — compressing the capability premium for sectoral breadth as regions approach the frontier, while amplifying the conversion of capabilities into more technologically intensive entries. Overall, the study contributes to bridging urban scaling theory and EEG by formalising urban scale as a structural boundary condition for regional diversification. |
| Keywords: | evolutionary economic geography, urban scaling, complexity economics, complex adaptive systems, regional diversification, geography of innovation |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2620 |
| By: | Benjamín Cornejo-Costas |
| Abstract: | This paper examines how cultural diversity of migrant inventors' teams influences a region’s capacity to produce green breakthrough innovations. It posits that highly skilled migrants enhance diversity, driving the recombination of new and impactful green technologies. The research also emphasises the significance of local capabilities in enabling regions to absorb and utilise the diverse knowledge these teams bring. Using patent data and inventor nationalities, the study analyses green breakthrough innovations across 281 NUTS2 regions in Europe over a span of 20 years. The findings reveal that cultural diversity plays a critical role in fostering such innovations. Moreover, this effect is amplified when new technologies are related to existing ones in the region, underscoring the importance of local capabilities. This research contributes to Evolutionary Economic Geography by highlighting how a region’s technological portfolio supports the development of related technologies while emphasising the vital role of diverse knowledge in driving green innovation. |
| Keywords: | cultural diversity, migrant inventors, breakthrough innovations, related capabilities |
| JEL: | F22 J61 O31 O33 Q55 R11 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2621 |
| By: | Cirillo, Valeria; Divella, Marialuisa; Ferrulli, Eustachio; Simone, Giuseppe |
| Abstract: | This paper examines how agglomeration and economic complexity jointly shape income inequality across Italian provinces. Using panel data for 103 provinces over 2000-2021, we combine measures of local agglomeration and economic complexity with tax-based indicators of income polarisation. The results show that agglomeration is associated with wider income disparities, reflecting stronger gains at the top of the distribution and weaker outcomes at the bottom. However, complexity significantly moderates this relationship, reducing the inequality-enhancing effects of agglomeration. The findings suggest that the distributional consequences of agglomeration depend on the level of sophistication of local productive structures. |
| Keywords: | Agglomeration, Economic complexity, Income inequality, Italian provinces, Panel-data analyses, Endogenous threshold panel model |
| JEL: | R12 O15 O14 D31 C23 C24 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1805 |
| By: | Caiafa, Clara R. |
| Abstract: | While a growing body of literature has argued that the rise of a global green hydrogen economy can reshape global value chains and trade patterns, significant uncertainty remains about how transformative such reorganization would be. The economic geography literature has examined drivers of industry location and the potential benefits of different spatial organizations of industries, but a comprehensive application of these findings to a green hydrogen economy has so far been missing. This paper bridges the economic geography literature with research on green hydrogen value chains to identify how different drivers can influence the location of activities across the green hydrogen value chain, and the implications thereof for development opportunities across regions. The analysis concludes that most findings about the renewables‑pull effect draw on cost‑optimization perspectives rooted in classical and neoclassical location theory, overlooking many insights from post‑1990s economic geography. Incorporating this broader perspective suggests that the transformational potential of green hydrogen is more limited than often assumed. Places with only factor input and transport cost advantages may attract simple, mature, activities, in industries where process innovation is incremental and led by large incumbents with the ability to exclude rivals, resulting in limited potential for knowledge-spillovers and self-sustained competitiveness. Meanwhile, regions with complex capabilities but limited renewable energy resources may retain high value added activities related to equipment manufacturing and knowledge development. This would mean that even if industry relocation leads to a reorganization of value chains, it would unlikely fundamentally transform prevailing uneven patterns of specialization and diversification. |
| Keywords: | Industrial Decarbonisation, Industry Location, Global Value Chains, Economic Developement, Green Hydrogen |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esconf:343028 |
| By: | Kapanadze, Ketevani (European Research University (ERUNI)); Pytlikova, Mariola (CERGE-EI; MUNI Brno) |
| Abstract: | In response to COVID-19, Schengen countries temporarily reintroduced internal border controls, disrupting cross-border integration. Using this policy change as a natural experiment and monthly nighttime lights data, we estimate the short-run effects on European municipalities. Municipalities along internal Schengen borders experienced a 3–4% decline in economic activity relative to interior municipalities, with larger estimated effects when external-border municipalities form the comparison group. Losses were greater in smaller and less densely populated municipalities and along economically asymmetric East–West borders, whereas municipalities along more economically similar borders generally experienced smaller declines. The effects also depended on the pre-pandemic purpose of cross-border mobility: higher shares of work- and business-related travel, services, and shopping were associated with larger losses, while the results for leisure and social mobility are consistent with greater scope for domestic reallocation of activity. Overall, the findings show that the local consequences of internal border closures depend on municipality characteristics, cross-border economic asymmetries, and the purpose of mobility. |
| Keywords: | border closures, cross-border mobility, Schengen area, nighttime lights, local economic activity, border regions, COVID-19, European integration |
| JEL: | R11 R12 R23 F15 F22 C21 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18878 |
| By: | Brian Greaney |
| Abstract: | I develop a dynamic quantitative spatial framework that combines key features of quantitative spatial and lifecycle housing models to study the distributional effects of spatially heterogeneous shocks. The model features many locations, moving costs, uninsurable income risk, lifecycle dynamics, housing tenure choice and housing frictions. The model is set in continuous time, which enables efficient computation. I apply the framework to analyze the welfare effects of heterogeneous productivity shocks across U.S. cities. I find that local productivity shocks have important distributional consequences: on average, a 1% shock to local productivity raises residents’ welfare by 0.37%. The pass-through from a local productivity shock to welfare varies substantially by age and housing tenure. I show that homeownership plays a central role in spatial redistribution: in an otherwise identical model without homeownership, the average welfare effect of a 1% local productivity shock is just 0.03%. This is because house price changes counteract the welfare effects of wage changes for renters, but augment them for owners. These results suggest that accounting for homeownership is essential for understanding the distributional effects of spatially heterogeneous shocks. |
| Keywords: | spatial dynamics; economic geography; migration; homeownership |
| JEL: | R12 R23 R0 J61 |
| Date: | 2026–08–18 |
| URL: | https://d.repec.org/n?u=RePEc:fip:feddwp:103688 |
| By: | Gabriel Ahlfeldt; Nathaniel Baum-Snow; Remi Jedwab |
| Abstract: | Tall buildings make up over 20% of real estate by value in the world's largest cities. Nonetheless, many governments constrain tall building construction, hindering urbanization and growth. Quantification for all cities worldwide using a canonical land use model disciplined with reduced form elasticity estimates indicates that eliminating existing height constraints would generate a welfare gain of 3.7% in developing economies. Aggregate land values would decline by 3.9%, incentivizing landowners to support height restrictions. Estimated elasticities of city population and built area with respect to aggregate city building heights are 0.13 and -0.16, reinforcing the quantitative evidence that tall buildings facilitate urban growth and compactness. Interactions between static demand factors and the geography of bedrock isolate 1975-2015 tall building construction driven by technology-induced reductions in the cost of height. Using indirect inference, we estimate a (congestion) elasticity of consumer welfare to urban density of -0.11. |
| Keywords: | Urban Density; Tall Buildings; Sustainable Urbanization; Urban Growth; Commercial Real Estate; Housing Supply; Urban Sprawl; Land Savings; Housing Affordability; Geographic Constraints. |
| JEL: | R11 R12 R14 R31 R33 O18 O13 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:gwc:wpaper:2026-012 |
| By: | Isaac Mann; David M. Levinson (TransportLab, School of Civil Engineering, University of Sydney) |
| Abstract: | Standard transport appraisal treats fare regulation in isolation, ignoring how price signals reshape urban geography. We bridge regulatory practice and quantitative spatial economics by constructing a Quantitative Spatial Transport Model (QSTM) for Greater Sydney, endogenising household and firm locations in response to transport shocks. Our framework extends the canonical quantitative spatial model by endogenising commuter mode choice and internalising network externalities through road congestion and the Mohring effect. Evaluating three public transport pricing interventions, including zero-fare, flat-fare, and fare-cap policies, we find that free transit is welfare-suboptimal, driven largely by operator revenue losses. In our setting, distance-based fares provide a spatial price signal that helps internalise resource costs and discourage sprawl, a signal that uniform flat fares mute. The model demonstrates that allocative efficiency requires a higher user contribution, revealing that weekly fare caps function as implicit subsidies for long-distance commuters. Higher fares trigger a spatial reorganisation where residents centralise to minimise commuting costs and firms decentralise to access labour. Ultimately, efficient distance-based pricing promotes a compact residential form, encourages polycentric employment, and reduces operator resource costs. |
| Keywords: | Quantitative spatial models, Transport appraisal, Fare regulation, Agglomeration economies, Spatial general equilibrium, Urban economics |
| JEL: | R40 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:nex:wpaper:paper-2026-22 |
| By: | Jia, Ningyuan; Dhingra, Swati; Fry, Emily; Hale, Sophie |
| Abstract: | This paper examines the implications of the EU–UK Trade and Cooperation Agreement (TCA) using a dynamic spatial general equilibrium model. Unlike previous studies that primarily projected potential impacts of Brexit based on uncertain scenarios, this analysis introduces new estimates of tariffs and non-tariff measures specified by the TCA. The findings show that while the TCA will necessitate substantial adjustments for some sectors, Brexit will not fundamentally alter the overall structure of the UK economy. However, the main impacts will manifest as significant hits to real wages and productivity, exacerbating the long-standing economic challenges faced by the UK. |
| Keywords: | Brexit;EU-UK Trade and Cooperation Agreement (TCA);UK regions and sectors;non-tariff measures;spatial general equilibrium |
| JEL: | F15 F13 F16 C68 R23 |
| Date: | 2026–07–08 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:140318 |
| By: | Antonio Haro-Banon |
| Abstract: | The UK economy experienced three major shocks between 2017 and 2022: Brexit, the pandemic, and the European energy crisis. This paper asks whether these events changed the structure of the UK's production network, using detailed data covering 12 UK regions and 105 industries. A key finding is that conventional measures can be misleading. On the face of it, the UK economy appeared to become more interconnected over this period, with standard input‐output multipliers rising by around 5‐6 per cent. However, once inflation and sector-specific price changes are stripped out, that increase disappears. The UK's average multiplier was essentially unchanged. The more important change was structural. Measures of how shocks propagate through supply chains show that the production network became more amplifying and more concentrated, with most of this shift occurring in 2021‐22. The evidence points overwhelmingly to the energy sector, especially electricity and gas, as the source of this change. Brexit‐related effects appear smaller, while pandemic effects are diffuse. The policy lesson is that resilience depends not only on average interconnectedness but also on where influence is concentrated. The energy‐price shock exposed the extent to which a small number of strategically important sectors can reshape the transmission of disturbances across the wider economy. Monitoring these structural vulnerabilities may be as important as tracking headline measures of economic activity. |
| Keywords: | input–output analysis; production-network amplification; price deflation; regional production networks; energy-price episode; UK regions |
| JEL: | C67 R11 R15 F14 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nsr:niesrd:586 |
| By: | OECD |
| Abstract: | Many communities across the OECD are struggling to keep pace with economic change. Persistent disparities in employment rates, skills mismatches and economic inactivity reflect a fractured geography of opportunities, and long-lasting effects of economic shocks and structural change. The consequences are not just economic, but also deeply personal, with potential to fuel disillusionment and to reinforce cycles of disadvantage. Yet, successful examples of transformation highlight that decline is not inevitable. Experiences from success stories can inform how to both better address scars from the past as well as more proactively adapt to future transitions. This paper provides a fresh perspective on place transformation, in particular one that better reflects the role of “soft infrastructure” like local leadership and place identity, bridges local and external drivers of change, and better integrates economic and social outcomes. |
| Date: | 2026–09–11 |
| URL: | https://d.repec.org/n?u=RePEc:oec:cfeaaa:2026/12-en |
| By: | Manal Nachite (UM5 - Université Mohammed V de Rabat [Agdal]); Taoufiq Yahyaoui (UM5 - Université Mohammed V de Rabat [Agdal]) |
| Abstract: | The rapid evolution of urban areas today poses challenges that go beyond the simple issue of the demographic and spatial growth of cities. In the Moroccan context, the development of metropolitan roles is now accompanied by new requirements in terms of territorial competitiveness, governance, adjustment to vulnerabilities and sustainability. However, studies on these changes are frequently structured around separate theoretical perspectives, which hinders the understanding of the links between urban expansion, metropolitan functioning and territorial resilience. This article aims to fill this gap by developing a conceptual framework for addressing these phenomena in a unified way. The study is based on a narrative and critical analysis of the books, drawing on major works on city economics, agglomeration economies, economic geography, metropolization, territorial governance, and urban resilience. The study stresses the complementarity of various methods while highlighting their limits when they are used in isolation. On the basis of this cross-reading, the authors suggest a conceptual framework articulated around five dimensions: the structuring elements of urban expansion, metropolitan potentialities, and territorial management policy. Urban resilience and the sustainability of territorial development. The relevance of the model is to link these dimensions in order to demonstrate how territories can convert urban growth into a more balanced and flexible evolution process. The suggested approach thus offers a theoretical foundation for the future study of the dynamics of Moroccan metropolises and for their empirical validation. |
| Abstract: | L'évolution accélérée des zones urbaines pose aujourd'hui des défis qui vont au-delà de la simple problématique de la croissance démographique et spatiale des villes. Dans le cadre marocain, le développement des rôles métropolitains s'accompagne désormais de nouvelles exigences en termes de compétitivité territoriale, de gouvernance, d'ajustement aux vulnérabilités et de durabilité. Cependant, les études sur ces changements se structurent fréquemment autour de perspectives théoriques séparées, ce qui entrave la compréhension des liens entre l'expansion urbaine, le fonctionnement à l'échelle métropolitaine et la résilience d'un territoire. Cet article vise à combler ce déficit en élaborant un cadre conceptuel permettant d'aborder ces phénomènes de façon unifiée. L'étude se base sur une analyse narrative et critique des ouvrages, faisant appel aux travaux majeurs sur l'économie des villes, les économies d'agglomération, la géographie économique, le métropolisation, la gouvernance territoriale et la résilience urbaine. L'étude souligne la complémentarité des diverses méthodes tout en mettant en exergue leurs limites quand elles sont utilisées de manière isolée. Sur la base de cette lecture croisée, les auteurs suggèrent un cadre conceptuel articulé autour de cinq dimensions : Les éléments structurants de l'expansion urbaine, les potentialités métropolitaines, la politique de gestion du territoire. La résilience en milieu urbain et la durabilité du développement territorial. La pertinence du modèle est de faire le lien entre ces dimensions afin de démontrer comment les territoires peuvent convertir la croissance urbaine en un processus d'évolution plus équilibré et flexible. L'approche suggérée offre donc un fondement théorique pour l'étude future des dynamiques des métropoles marocaines et pour leur validation empirique. |
| Keywords: | économie urbaine, développement territorial durable JEL Classification : R11, R12, R58, O18, H70, Sustainable territorial development. Classification JEL: R11, R12, R58, O18, H70 croissance urbaine, metropolization urban economy territorial governance urban resilience urban growth Sustainable territorial development. Classification JEL: R11, R12, R58, O18, H70 croissance urbaine métropolisation économie urbaine gouvernance territoriale résilience urbaine développement territorial durable JEL Classification : R11, R12, R58, O18, H70, développement territorial durable JEL Classification : R11, résilience urbaine, metropolization, metropolization urban economy territorial governance urban resilience urban growth Sustainable territorial development. Classification JEL: R11, R12, R58, O18, H70 croissance urbaine métropolisation économie urbaine gouvernance territoriale résilience urbaine développement territorial durable JEL Classification : R11, H70, gouvernance territoriale, urban economy, territorial governance, urban resilience, urban growth, Sustainable territorial development. Classification JEL: R11, H70 croissance urbaine, métropolisation |
| Date: | 2026–08–25 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05727055 |
| By: | Annie Liu; Pinghui Wu |
| Abstract: | This paper examines the local labor market effects of mega-scale semiconductor investment, using Maricopa County, Arizona, as a case study. The county has received about $300 billion in commitments through the 2030s under the CHIPS and Science Act of 2022, the largest place based industrial investment in recent US history. Using synthetic difference-in-differences, we find large employment gains, but few of these gains occur within the manufacturing sector. Semiconductor manufacturing shows no measurable net change, as hiring at new facilities offsets reductions at existing ones. The gains instead concentrate in construction—13 to 33 percent above the synthetic counterfactual—and in supply chain sectors—5 to 46 percent above—which together represent about 9, 700 and 7, 100 jobs, respectively. More than 80 percent of the latter fall into wholesale trade and technical services rather than manufacturing. We attribute this composition to the high capital-to-labor ratio of semiconductor fabrication and to a scale threshold in supplier relocation. |
| Keywords: | CHIPS and Science Act; place-based policies; Semiconductor industry |
| JEL: | R11 R58 L63 |
| Date: | 2026–08–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedbwp:103718 |