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on Economic Geography |
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Issue of 2025–06–09
seventeen papers chosen by Andreas Koch, Institut für Angewandte Wirtschaftsforschung |
| By: | Tullio Jappelli (University of Naples Federico II, CSEF, and CEPR); Ettore Savoia (Sveriges Riksbank and CeMoF); Alessandro Sciacchetano (London School of Economics and Political Science) |
| Abstract: | This paper studies a place-based industrial policy (PBIP) aiming to establish industrial clusters in Italy in the 1960s-70s. Combining historical archives spanning one century with administrative data and leveraging exogenous variation in government intervention, we investigate both the immediate effects of PBIP and its long-term implications for local development. We document agglomeration of workers and firms in the targeted areas persisting well after the end of the policy. By promoting high-technology manufacturing, PBIP favored demand for business services and the emergence of a skilled local workforce. Over time, this produced a spillover from manufacturing – the only sector targeted by the program – to services, especially in knowledge-intensive jobs. Accordingly, we estimate higher local wages, human capital, and house prices in the long run. We provide suggestive evidence that these persistent effects may depend on the initial conditions of targeted locations. |
| Keywords: | place-based industrial policy, employment, wages, agglomeration |
| JEL: | J24 N94 O14 O25 R58 |
| Date: | 2024–10–15 |
| URL: | https://d.repec.org/n?u=RePEc:sef:csefwp:733 |
| By: | Hanson, Gordon H.; Moretti, Enrico |
| Abstract: | We examine changes in the spatial distribution of good jobs across U.S. commuting zones over 1980-2000 and 2000-2021. We define good jobs as those in industries in which full-time workers attain high wages, accounting for individual and regional characteristics. The share of good jobs in manufacturing has plummeted; for college graduates, good jobs have shifted to (mostly tradable) business, professional, and IT services, while for those without a BA they have shifted to (nontradable) construction. There is strong persistence in where good jobs are located. Over the last four decades, places with larger concentrations of good job industries have tended to hold onto them, consistent with a model of proportional growth. Turning to regional specialization in good job industries, we find evidence of mean reversion. Commuting zones with larger initial concentrations of good jobs have thus seen even faster growth in lower-wage (and mostly nontradable) services. Changing regional employment patterns are most pronounced among racial minorities and the foreign-born, who are relatively concentrated in fast growing cities of the South and West. Therefore, good job regions today look vastly different than in 1980: they are more centered around human-capital-intensive tradable services, are surrounded by larger concentrations of low-wage, non-tradable industries, and are more demographically diverse. (Stone Center on Socio-Economic Inequality Working Paper) |
| Date: | 2025–05–09 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:z6qkn_v1 |
| By: | Yuhei MIYAUCHI; Kentaro NAKAJIMA; Stephen J. REDDING |
| Abstract: | We develop a tractable quantitative framework for modelling the rich patterns of spatial mobility observed in smartphone data. We show that travel is frequently undertaken as part of a travel itinerary, defined as a journey starting and ending at home that can include more than one intermediate stop on a given day. We show that these travel itineraries provide microfoundations for consumption externalities and generate rich patterns of complementarity and substitutability between locations. We show that the consumption externalities implied by travel itineraries are central to matching quasi-experimental evidence from the shift to WFH. We find that these consumption externalities are key drivers of the agglomeration of economic activity in central cities and shape the relative welfare gains from alternative transport improvements in favor of investments in central cities. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25048 |
| By: | Laura Conti; Marco Francesconi; Giulio Papini; Michel Serafinelli; Gabriella Conti |
| Abstract: | This paper documents how the local labor market (LLM) responds to a change in touristic attractiveness. Leveraging largely underutilized data from several sources, we exploit a unique classification of Italian localities based on their main touristic assets and aggregate trends in foreign tourists' choices in a shift-share research design. Looking at all LLMs, we find a strong positive relationship between changes in attractiveness and changes in the local tourism-related economic activity, with a positive impact on tourism expenditure and tourism employment, but no effect on total employment. In high-unemployment LLMs, however, we find evidence of sizable total employment effects and large indirect effects generated through industries related to tourism and firms in the nontradable sector. We observe no effects on wage growth. We discuss our results in the context of the current policy debate on the role of tourism in the development of the local economy. |
| Keywords: | tourism, job growth, unemployment, local spillovers, heterogeneity |
| JEL: | R11 J21 R12 R23 Z30 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11914 |
| By: | Coelli, Federica (Dept. of Economics, University of Zurich); Pelzl, Paul (Dept. of Business and Management Science, Norwegian School of Economics) |
| Abstract: | Using oil and gas shocks as an exogenous source of business cycles at the U.S. commuting zone level, we provide novel evidence that local booms increase local patenting, especially in non-metropolitan areas. This reflects agglomeration economies that make incumbent inventors more productive. In contrast to total patenting, innovation in oil and gas – the sector closest to the boom – is countercyclical, consistent with higher opportunity costs of innovation in a booming industry. Our findings shed new light on the spatial dimension of innovation, inform recent debates on place-based industrial policy, and help to reconcile mixed evidence on the cyclicality of innovation. |
| Keywords: | Innovation; patents; local economic booms; agglomeration; natural resources |
| JEL: | L71 O12 O31 |
| Date: | 2025–05–26 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:nhhfms:2025_020 |
| By: | Konar, Anushree; Tripathi, Sabyasachi |
| Abstract: | Identifying the optimal population size at which cities maximize economic benefits while minimizing congestion and pollution is a challenge. This research explores the optimal city size by examining the relationship between population and economic performance, measured by city GDP. Using data from OECD regions for about 562 cities, the analysis employs a quadratic regression model to test an inverse U-shaped relationship between city population and GDP in 2020. The empirical results show that cities initially experience economic growth as populations increase, but after a certain point (8.85 million), the benefits diminish due to congestion and pollution. The study concludes that an optimal city size exists, balancing the advantages of agglomeration with the costs of urban expansion. Additionally, population density, territorial fragmentation, working-age population, and built-up area positively affect city GDP, whereas air pollution negatively impacts it. Finally, several policies are recommended for sustainable urban development and efficient resource allocation. |
| Keywords: | Urban growth, optimal city size, population size, economic measurement, OECD cities. |
| JEL: | R0 R1 R11 R12 |
| Date: | 2025–05–03 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124673 |
| By: | Autor, David H (Massachusetts Institute of Technology); Dorn, David; Hanson, Gordon H.; Jones, Maggie R.; Setzler, Bradley |
| 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. (Stone Center on Socio-Economic Inequality Working Paper) |
| Date: | 2025–05–09 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:7rfae_v1 |
| By: | AIBA, Ikuto; YAMAGHISHI, Atsushi |
| Abstract: | We examine how the inflow of external income shapes the pattern of urbanization and the economic structure. We focus on the unique case of Okinawa in Japan, where many US military bases were constructed for strategic reasons and the income inflow from them accounted for up to 40% of the aggregate income. Using newly digitized data, we first document rapid urbanization near the bases, driven by service sector expansion rather than manufacturing. We then develop a new quantitative spatial model and calibrate it to the Okinawan economy in 1970. Our counterfactual analysis highlights that the US-base related income was crucial to urbanization without industrialization. Contrary to Dutch disease concerns, we find that such urbanization without industrialization significantly increased aggregate income and welfare. |
| Keywords: | Urbanization, Service sector, Quantitative spatial model, Military bases, Okinawa |
| JEL: | O14 O18 N40 R11 R12 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:hit:hituec:767 |
| By: | Randall Akee; Maggie R. Jones; Emilia Simeonova |
| Abstract: | Tribal lands in the U.S. have historically experienced some of the worst economic conditions in the nation. We review some existing research on the effect of American Indian tribal casinos on various measures of local economic development. This is an industry that began in the early 1990s and currently generates more than $40 billion annually. We also review the state of the literature on the effects of casino operations on communities in or adjacent to tribal areas. Using a new dataset linking individual and enterprise-level data longitudinally, this study examines the industry- and location-specific impacts of tribal casino operations. We focus in particular on the employment of American Indians. We document positive flows from unemployment and non-casino geographies to work in sectors related to casino operations. Tribal casinos differ from other standard place-based economic development projects in that they are focused on a single industry; we discuss these differences and note that some of the positive spillover effects may be similar to other, more standard place-based policies. Finally, we discuss additional and open-ended questions for future research on this topic. |
| JEL: | J20 O2 R11 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33744 |
| By: | Bosker, M.; Haasbroek, M. |
| Abstract: | We use detailed historical data on India’s domestic infrastructure to show how its high domestic transport costs have conditioned the local labour market consequences of its drastic import tariff liberalization in the early 1990s. We find that districts located farther away from the country’s main international gateways are better shielded from the resulting increased foreign import competition: their non-agricultural employment falls less than in otherwise similarly exposed districts located closer to India’s major ports. At the same time, they also benefit less from improved access to foreign intermediates: non-agricultural employment increases less than in districts with a similar input-output structure but located closer to the country’s main ports. These employment responses also vary across firms of different sizes: employment in small to medium sized firms is hit hardest by increased import competition, whereas employment in medium to large firms benefits most from better access to foreign intermediates. This difference between small and large firms is also most pronounced in districts best-connected to India’s major ports. |
| Keywords: | Words Gains from Trade, Domestic Infrastructure, Local Labour Demand, India |
| JEL: | F14 F15 R11 |
| Date: | 2025–04–29 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camjip:2512 |
| By: | Marques Anabela (European Commission - JRC); Lelli Francesco; Molica Francesco (European Commission - JRC) |
| Abstract: | This paper explores the spatial patterns associated with large-scale relocation events in the European Union. It examines both relocation within national borders and delocalisation across countries, using data from 2002 to 2023 at the NUTS2 level. The study draws on Eurofoundâs European Restructuring Monitor (ERM) dataset and applies Probit and Poisson regression models to identify key regional characteristics linked to these events. The findings suggest that cost efficiency plays a central role in driving both types of relocation. Regions with greater access to Cohesion Policy funds tend to experience fewer internal relocations, while a higher availability of State aid is associated with a lower incidence of cross-border delocalisations. The analysis also indicates that manufacturing sectors - particularly electronics, automotive, and computer industries - are most frequently affected, likely due to the nature of their production processes. Moreover, such relocation dynamics appear more dominant in more developed regions, possibly due to the cost advantages offered by less developed regions. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:termod:202503 |
| By: | Qianqian Yang (Graduate School of Economics, Kobe University, JAPAN); Nobuaki Hamaguchi (Research Institute for Economics and Business Administration, Kobe University, JAPAN) |
| Abstract: | This paper develops a spatial general equilibrium model with exogenous minimum wages to investigate regional minimum wage disparities in the New Economic Geography. Numerical simulations in a two-region economy reveal the impact of minimum wage hikes on the spatial distribution of firms. We observe industrial hollowing out beyond a critical minimum wage gap threshold, yet regions with higher minimum wages can remain attractive as the core, particularly with low transport costs. Such attractiveness can be interpreted as agglomeration rent. We further examine the sustainability of the core-periphery pattern and the impact of minimum wage increases on the local labor market. |
| Keywords: | Spatial general equilibrium model; Minimum wage; Core-periphery pattern; Transport cost |
| JEL: | F12 F16 R12 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:kob:dpaper:dp2025-09 |
| By: | Nobuya FUKUGAWA |
| Abstract: | Universities, embedded within regional innovation systems, promote entrepreneurship through intermediary functions, including resource provision, consulting, and networking. Drawing on perspectives from entrepreneurial ecosystems and innovation intermediation, this study examines how the effectiveness of these university functions varies according to regional innovation contexts and institutional types. The analysis integrates comprehensive panel data from 1, 027 universities (2019–2023) with detailed patent and basic research funding databases. Fixed-effects negative binomial regression models with lagged independent variables are employed to control for unobserved time-invariant heterogeneity and to mitigate simultaneity bias. The results show that basic research capacity is consistently and positively associated with startup formation, highlighting its foundational role in academic entrepreneurship. However, the effects of other support functions are highly context-dependent: human resource and knowledge service linkages promote startup activity only when universities are embedded within innovation agglomerations. Investor linkages show no significant overall effect but become positively associated with startup formation in peripheral regions where access to capital is limited. These findings underscore the need for differentiated, ecosystem-sensitive intermediation strategies and highlight the importance of aligning university support mechanisms with the structure and maturity of surrounding innovation environments. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25044 |
| By: | Hanson, Gordon H.; Rodrik, Dani; Sandhu, Rohan |
| 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. (Stone Center on Socio-Economic Inequality Working Paper) |
| Date: | 2025–05–09 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:2bg7a_v1 |
| By: | Ron Boschma |
| Abstract: | The paper reviews how the concept of institutional complementarities has been approached in the Varieties of Capitalism and Policy Mix literatures. Based on a critical review, we propose instead an evolutionary framework to analyze institutional complementarities that is inspired by the principle of relatedness. We discuss promising future applications in economic geography, such as how complementarities across institutions may promote regional diversification in regions, how this institutional complementarity framework may shed light on the question what is feasible when implementing institutional change in specific territorial contexts, and how it may contribute to understand better how regional innovation policy may become effective in particular institutional contexts. |
| Keywords: | institutions, institutional complementarities, institutional relatedness, institutional change, institutional space, varieties of capitalism, policy mix, policy space, regional diversification, Evolutionary Economic Geography |
| JEL: | B15 B52 P51 R11 R58 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2514 |
| By: | Sergio Palomeque |
| Abstract: | This paper examines the processes of generating new technical knowledge, aim- ing to contribute to an understanding of how less developed economies can diversify their knowledge base to support economic development. We study the structure of relatedness of required knowledge between technologies at a global level, conceived as a network where technologies are connected according to the intensity with which they co-occur in the inventors’ portfolios. Based on this, topological characteristics of the network are studied using node-level metrics to propose diversification strate- gies that alleviate the lock-in effects suffered by less developed economies. The paper contributes to the literature by proposing two indicators that can be used to analyse relevant dimensions of the innovation system of cities in less developed regions. One of the indicators enables us to compare the levels of stability of the technologies that comprise the knowledge base of the cities. The second provides a measure of the level of alternatives available to the city for each diversification decision. The results, based on the analysis of Latin American cities, show that the stability of the technologies present in a city, as well as the alternatives available to choose its diversification path, are relevant to designing diversification strategies that could contribute to overcoming the constraints generated by the characteristics of the knowledge base of those cities. |
| Keywords: | relatedness; innovation systems; patents; cities; Latin America; Evolu- tionary Economic Geography |
| JEL: | B52 D85 O31 O32 O34 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2515 |
| By: | Qianqian Yang (Graduate School of Economics, Kobe University, JAPAN); Nobuaki Hamaguchi (Research Institute for Economics and Business Administration, Kobe University, JAPAN) |
| Abstract: | This paper offers an integrated perspective that bridges labor economics and spatial economics to shed light on the broader implications of minimum wage policies. Traditional labor economics, grounded in neoclassical and partial equilibrium models, yields ambiguous theoretical predictions regarding the employment effects of minimum wages, making empirical analysis essential. Yet empirical findings from both developed and developing countries remain mixed, shaped by differences in data, methods, and variable definitions. Spatial economics, particularly through general equilibrium frameworks, provides insight into how agglomeration forces, transport costs, increasing returns, and factor mobility influence regional economic outcomes. These models suggest that core regions benefiting from agglomeration rents may be better positioned to sustain generous public policies, including higher minimum wages. We also review evidence on how minimum wages affect migration and firm location decisions, though results remain inconclusive. Through a comprehensive review of the extant literature, this paper underscores the value of incorporating spatial perspectives in understanding minimum wage effects and identifies directions for future research. |
| Keywords: | Minimum wage; Labor economics; Regional labor markets; Agglomeration rent; Spatial economics |
| JEL: | J38 R12 R23 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:kob:dpaper:dp2025-08 |