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on Economic Geography |
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Issue of 2025–03–17
twelve papers chosen by Andreas Koch, Institut für Angewandte Wirtschaftsforschung |
| By: | Redding, Stephen J. |
| Abstract: | This paper reviews recent research in spatial economics. The field of spatial economics is concerned with the determinants and effects of the location of economic activity in geographic space. It analyses how geographical location shapes the economic activities per-formed by agents, their interactions with one another, their welfare, and the effects of public policy interventions. Research in this area has benefited from the simultaneous development of new theoretical techniques, new sources of geographic information systems (GIS) data, rapid advances in computing power, machine learning and artificial intelligence, and renewed public policy interest in infrastructure and appropriate policies towards places 'left-behind' by globalization and technology. Among the insights from this research are the role of goods and commuting market access in determining location choices; the conditions under which the location of economic activity is characterized by multiple equilibria; the circumstances under which temporary shocks can have permanent effects (hysteresis or path dependence); the heterogeneous and persistent impact of local shocks; the magnitude and spatial decay of agglomeration economics; and the role of both agglomeration forces and endogenous changes in land use in shaping the impact of transport infrastructure improvements. |
| Keywords: | cities; economic geography; regions; spatial economics |
| JEL: | F15 R10 R12 |
| Date: | 2024–11–06 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126845 |
| By: | Pablo D. Fajgelbaum; Cecile Gaubert |
| Abstract: | We summarize recent methods to study optimal spatial policies. We center the discussion on policies that implement the optimal distribution of population in the presence of spatial spillovers, spatial transfers to optimally tackle redistribution between rich and poor regions, and optimal transportation investments. |
| JEL: | H21 H23 R12 R13 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33493 |
| By: | Iimi, Atsushi |
| Abstract: | Transport connectivity is an important determinant of agglomeration economies and urbanization. However, measuring its impacts is a complex task when causality is considered. An important empirical challenge comes from potential endogeneity of infrastructure placement. To deal with the endogeneity problem, first, the paper constructs detailed georeferenced connectivity measurements based on micro shipping data collected over 10 years. Then, the system generalized method of moments regression is applied. Using unique data from the Caucasus and Central Asian countries, the paper estimates the impact of transport connectivity on agglomeration economies. It finds that agglomeration economies are significant and persistent in the region. Thus, the existing firm clusters are likely to continue growing. However, a constraint is also found. Large cities exhibit congestion diseconomies. Finally, the paper shows that the improvement of transport connectivity, especially local market accessibility, has a significant effect on agglomeration. By contrast, no clear evidence to support the impact of improved regional connectivity on agglomeration is observed yet. To take full advantage of agglomeration economies at the regional level, further efforts may be needed, for instance, toward increasing efficiency in transportation and logistics, improving the freight load, and/or reducing the time and costs of border crossing, which add to overall transport costs and times. |
| Date: | 2023–07–31 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10534 |
| By: | Faieta, Elena (University of Essex); Feng, Zhexin (University of Essex); Serafinelli, Michel (King's College London) |
| Abstract: | A quarter of the population in high-income countries lives in rural areas. However, existing empirical evidence on these areas in OECD countries is scarce. Over the past several decades, many rural areas have been declining. Nevertheless, it is unclear whether these struggling rural areas are representative of the broad experience of the universe of rural areas. This paper provides a comprehensive analysis of employment evolutions for rural areas in Western Europe during the period 1970–2010. We first analyse 846 rural areas in France, Germany, Italy and the UK, and document large differences in overall employment growth across rural areas in all four countries. A sizable fraction of rural areas lost employment. However, employment in a significant number of rural areas grew during this period. The 90–10 percentile difference in decadal total employment growth of rural areas is 17.4 log points, representing an economically large difference. We then show, using data for Italy and the UK, that changes in the industry structure are fast in rural areas. The estimates also indicate that industry turnover is positively associated with employment growth. Moreover, the evidence shows that areas with stronger total employment growth exhibit stronger employment growth in the manufacturing of food and beverages. All conclusions are similar for rural remote areas. Taken together, our results lend support to the hypothesis that rural economies are not static entities; change is common in these areas, and employment evolutions often result from industry-level dynamics. |
| Keywords: | rural employment, spatial heterogeneity, industry turnover |
| JEL: | R12 R32 J21 R11 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17715 |
| By: | D'Aoust, Olivia Severine; Galdo, Virgilio; Ianchovichina, Elena |
| Abstract: | The paper documents the evolution of territorial disparities in labor and location productivity in 14 countries in Latin America, using millions of observations from harmonized household surveys and censuses. Between the early 2000s and the late 2010s, most countries in the region experienced significant reductions in regional inequality as real labor incomes and location productivity premia converged at the first and second administrative levels. The leveling up reflected both the slowdown in productivity growth in affluent predominantly urban municipalities and the catchup of relatively poor, predominantly rural municipalities. Absolute convergence narrowed the labor income gaps with leading metropolitan areas, including the disparitites exploitable through migration, especially among the bottom 40 percent of households, as cities de-industrialized, yet continued to attract migrants. On the eve of the Covid-19 pandemic, income disparities with leading metropolitan areas remained high in nearly all countries, largely due to differences in educational attainment, but in a few countries, large differences in returns to endowments indicate potentially significant returns to migration to the leading metropolitan areas, especially for residents of relatively poor, remote regions. Rather than a clear rural-urban-metropolitan divide, in most countries the paper documents substantial overlap between the location-premia distributions of different types of second-level administrative areas and small differences between the average urban and rural place productivity premia. |
| Date: | 2023–06–12 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10480 |
| By: | Baez Ramirez, Javier Eduardo; Celik, Cigdem; Kshirsagar, Varun Sridhar |
| Abstract: | This paper combines official subnational and remote-sensed data to uncover the relationships between business cycles in Türkiye and the corresponding changes in economic activity at lower levels of spatial aggregation. The objective is to document changes in the nature of growth within and across business cycles, with a focus on understanding how sectoral changes interact with within-country remoteness during each phase. The paper shows that: (i) the significant growth between 2010 and 2017 was bookended by recessions in which gross domestic product per capita fell more sharply the closer a province was to one of the two largest cities; (ii) the two recessions differed in terms of their sectoral impacts, with manufacturing declines inversely related to remoteness during the first recession and positively related during the second; (iii) there were large increases in the construction sector’s gross value added during the post-2009 rebound—consistent with unprecedented increases in nighttime light luminosity—with growth positively related to remoteness; and (iv) changes in nigh ttime light luminosity are correlated with changes in physical activity: a 10 percent increase in nighttime lights is associated with a 3.5 percent increase in construction output and a 1.5 percent increase in manufacturing output. Together, the results suggest that recessions and recoveries that may appear to be similar at a macroeconomic scale may be driven by very different changes at more disaggregated spatial scales and have varied impacts on regional convergence. |
| Date: | 2023–08–24 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10553 |
| By: | Antonietti, Roberto; Burlina, Chiara; Rodriguez-Pose, Andres |
| Abstract: | In this paper, we examine the effect of regional digital technology (including computing, communication equipment, software, and databases) on income distribution at the regional level. We aim to fill a gap in existing research by exploring the moderating role of formal and informal institutions —such as bonding and bridging social capital— in shaping how digital technology affects income inequality across European NUTS2 regions from 2006 to 2016. The results indicate that regions with greater access to digital technology are prone to higher levels of income inequality. However, this negative link is mitigated by strong formal and informal institutions, particularly through improved government effectiveness and bridging social capital. The findings are robust to potential endogeneity concerns, as demonstrated by the instrumental variable approach adopted. |
| Keywords: | digital technology; institutions; inequalities; European regions |
| JEL: | R11 O33 D02 R58 |
| Date: | 2025–04–30 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:127062 |
| By: | Paul, Saumik; Raju, Dhushyanth |
| Abstract: | This paper studies the effect of a local sectoral productivity shock on subnational structural transformation. The analysis is based on regional input-output tables constructed for 2004 and 2013 and available censuses of firms in 2003 and 2013 for Ghana. Based on the data, the analysis confirms the occurrence of a mining productivity shock. Between 2004 and 2013, mining grew dramatically as a share of gross domestic product. The mining shock occurred primarily in the south of Ghana with much larger increases in mining’s share in regional output, the number of mining firms, and mining employment than in the north of the country. The findings show that the mining productivity shock led to growing regional (north-south) differences in intersectoral linkages, with greater intermediate use of mining output and a larger sectoral total factor productivity ratio between mining and manufacturing in the south than in the north. Informed by international evidence of strong intersectoral linkages between mining and heavy manufacturing industries, the paper examines the performance of heavy manufacturing in response to the mining productivity shock. The elasticity of heavy manufacturing to mining employment growth is 50 percent larger in the south than in the north, generated by an increase in both average firm employment and the entry of new firms. These north-south differences are interpreted as possibly due to weak interregional production linkages. |
| Date: | 2023–05–16 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10446 |
| By: | Bachtrögler, Julia |
| Abstract: | This reflection paper examines the influence of administrative capacity on the absorption and effective use of Cohesion Policy funds. First, it examines the current level of absorption of Cohesion Policy funds in the 2014-2020 programming period. Second, a literature review on the relationship between administrative capacity and the absorption of Cohesion Policy funds highlights the factors affecting the availability of administrative resources. Third, the role of administrative capacity for the effectiveness of funds usage in EU regions is discussed. The literature concludes that the effects of Cohesion Policy are heterogeneous across regions. Administrative capacity is an important element of a region's absorptive capacity, also due to the project selection process through managing authorities. Therefore, measures should be taken to attract motivated and well-qualified staff and to ensure communication and coordination with stakeholders and other relevant bodies. Finally, a recent study on regional development opportunities of green and digital technologies is presented, pointing to the knowledge of administrative staff about regional characteristics and capabilities as essential contribution to "good" policy implementation |
| Keywords: | EU budget, cohesion policy, administrative capacity, absorption, regional policy implementation |
| JEL: | H83 H87 R58 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:312186 |
| By: | Eva Coll-Martínez (IEP Toulouse - Sciences Po Toulouse - Institut d'études politiques de Toulouse, LEREPS - Laboratoire d'Etude et de Recherche sur l'Economie, les Politiques et les Systèmes Sociaux - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - UT2J - Université Toulouse - Jean Jaurès - UT - Université de Toulouse - Institut d'Études Politiques [IEP] - Toulouse - ENSFEA - École Nationale Supérieure de Formation de l'Enseignement Agricole de Toulouse-Auzeville); Carles Méndez-Ortega (Open University of Catalonia [Barcelona]) |
| Abstract: | Nowadays, due to the post-COVID-19 situation, teleworking has grown exponentially worldwide. In this context, and as the pandemic has moved into a less restrictive phase, the role of coworking spaces (CSs) has gained relevance. This chapter investigates the location patterns and characteristics of 599 coworking spaces in Spain as of 2021. Specifically, it examines the location factors, characteristics, and attractiveness of central and peripheral regions of these spaces. Data from CSs in Spain provided by the COST Action CA18214 is used. By analyzing features of the CSs, utilizing Geographical Information Systems and Kd functions of agglomeration, we confirmed that CSs are highly concentrated in specific urban areas of Spain where there are greater opportunities to meet customers and suppliers, access to human capital, proximity to key amenities, and good connections. |
| Date: | 2024–02 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04911140 |
| By: | Batabyal, Amitrajeet; Beladi, Hamid |
| Abstract: | We analyze a stylized creative region populated by three groups of individuals: the elites who hold political and taxing power, the entrepreneurial creative class that produces a knowledge good, and workers. Political competition between the elites and the creative class results in the elites levying distortionary taxes on the creative class. We provide a rationale for this kind of taxation and then present two results. First, we demonstrate that this kind of distortionary taxation reduces the equilibrium growth rate of the economy of our creative region. Second, we explain why this negative result arises. |
| Keywords: | Creative Class, Distortionary Tax, Elite, Political Competition |
| JEL: | H21 R11 |
| Date: | 2024–11–15 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123673 |
| By: | Newhouse, David Locke |
| Abstract: | This paper offers a nontechnical review of selected applications that combine survey and geospatial data to generate small area estimates of wealth or poverty. Publicly available data from satellites and phones predicts poverty and wealth accurately across space, when evaluated against census data, and their use in model-based estimates improve the accuracy and efficiency of direct survey estimates. Although the evidence is scant, models based on interpretable features appear to predict at least as well as estimates derived from Convolutional Neural Networks. Estimates for sampled areas are significantly more accurate than those for non-sampled areas due to informative sampling. In general, estimates benefit from using geospatial data at the most disaggregated level possible. Tree-based machine learning methods appear to generate more accurate estimates than linear mixed models. Small area estimates using geospatial data can improve the design of social assistance programs, particularly when the existing targeting system is poorly designed. |
| Date: | 2023–06–28 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10512 |