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on Economic Geography |
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Issue of 2026–02–23
eleven papers chosen by Andreas Koch, Institut für Angewandte Wirtschaftsforschung |
| By: | Gabriel M. Ahlfeldt; Stephan Heblich; Tobias Seidel; Fan Yin |
| Abstract: | We construct a new micro-geographic commercial rent index for Germany to study the capitalization of agglomeration economies into floor space prices. In large local labor markets, commercial rents decline by -17% per kilometer from the central business district, compared to 13% for residential rents, reflecting stronger agglomeration benefits at the center. Commercial rents in central business districts increase with local labor market size at an elasticity of 15%, implying that wage responses capture only about half of the agglomeration effect on total factor productivity. |
| Keywords: | Agglomeration, commercial rent, prime locations, spatial equilibrium, total factor productivity |
| JEL: | L2 R3 |
| Date: | 2026–02–11 |
| URL: | https://d.repec.org/n?u=RePEc:bdp:dpaper:0091 |
| By: | Berliant, Marcus; Watanabe, Axel |
| Abstract: | This article demonstrates the emergence of agglomeration unaccompanied by conventional drivers such as scale economies, externalities or comparative advantages. We construct a two-region general equilibrium model with four types of households; there are four commodities and the same linear production functions in each region. Households migrate in search of commodities they lack in their endowment. A type sorts disassortatively toward another type who holds such commodities, resulting in intense agglomerations of diverse types. In contrast, a type sorts assortatively away from another type when they compete for endowments that cannot be transported or produced, resulting in moderate agglomerations dominated by selected types. We identify type complementarity and endowment portability as the primary causative factors behind spatial sorting and the resultant equilibrium agglomeration. |
| Keywords: | Agglomeration; General equilibrium; Spatial sorting |
| JEL: | R13 |
| Date: | 2025–12–24 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127464 |
| By: | Rodríguez-Pose, Andrés |
| Abstract: | The European Union Cohesion Policy – the flagship EU investment programme – has since its 1989 reform invested over a trillion euros to promote development across Europe. Over the decades, this policy has helped transform economies, create jobs and reduce disparities. Yet it faces a crisis of identity and legitimacy. Once promoted as a bold development investment in Europe’s future, it has increasingly been reframed in political narratives as a form of support, solidarity or even as a compensation or subsidy for the ‘losers’ of integration. This mis-selling of Cohesion Policy has eroded its public image and political support, just as new challenges – from competitiveness and trade to security – have put its future at stake in EU budget negotiations. This article delves into the narrative of EU Cohesion Policy since 1989 and examines how it shifted from ‘development investment’ to ‘losers’ compensation’. It argues that this reframing has undermined the policy’s relevance and credibility and contributed to its frail position in the current budget negotiations for the post-2027 period. A return to a development-focussed narrative to re-sell the policy is urgently needed. |
| Keywords: | cohesion policy; regional development; EU budget; economic convergence; solidarity; European integration; structural funds; regional disparaties |
| JEL: | R58 O52 H77 |
| Date: | 2026–02–02 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:137180 |
| By: | Herbertson, Max; Lee, Neil; Pardy, Martina; Soskice, David; Storper, Michael |
| Abstract: | Europe’s economic stagnation and declining global position stem from its failure to lead in first mover innovation, as the United States and, increasingly, China have produced the new breakthrough technologies of the latest industrial revolution. In this paper, we consider the causes of this innovation problem: interrelated issues in the structure of innovation institutions, education, geography, finance and markets, all of which have deep political roots. We build on a game theory model of strategic complementarities and mutual commitments to suggest a path forward which would allow a ‘coalition of the willing’ of advanced European states to develop US style institutions of innovation while combining them with Europe’s social model. Using this, we chart a feasible transition path for Europe which builds on strengths in incremental innovation while creating first mover capacities through integrated capital markets, venture ecosystems, and focused regional cluster development. Only by overcoming its first mover innovation gap, while not abandoning the goals of its social model, can Europe achieve growth, global relevance, and social stability in an era of intensified geopolitical and technological competition. |
| JEL: | N0 R14 J01 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:137116 |
| By: | Ferreira, Thomas; Hoyle, Tristan; Horn, Aidan J.; Steenkamp, Daan |
| Abstract: | This paper explores the use of night lights to track economic activity in South Africa at a level of spatial granularity and periodic frequency not obtainable by traditional indicators. It shows mismatches between urban population density, economic activity and infrastructure. We show that satellite data suggest very low growth in night light intensity across South Africa over the last decade and a decoupling from economic and population growth. We show that satellite data sheds light on the implications of the collapse of state service delivery and South Africa's decline in GDP per capita over the last decade. The most likely explanation of the slow growth in night light intensity in South Africa is municipal infrastructural degradation, observed in the breakdown of a large proportion of streetlights. Other possibilities include a shift to solar and off‐grid electricity supply, the decline in industrial and manufacturing production in South Africa, or improvements in energy efficiency. However, the shift to more efficient lighting technologies does not explain why night lights has grown so much more in fast growing developing countries. These results reveal a lack of densification in urban areas that contribute to higher transportation costs and reservation wages, discriminating against job creation and efficient service provision. Our results raise questions about the depth of South Africa's structural slowdown, the ability of traditional indicators to fully capture shifts in spatial economic vibrancy, and the impacts of urban planning policies on economic efficiency and development. |
| Keywords: | night lights, satellite data, regional activity |
| JEL: | C55 R11 R12 |
| Date: | 2026–01–23 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127824 |
| By: | Rodríguez-Pose, Andrés; You, Zhuoying |
| Abstract: | Few studies have examined the economic consequences of deploying artificial intelligence (AI) and robotics in less-developed cities, where policies have often failed. To address this gap, we analyse a panel of 270 Chinese cities (2009–2019) using OLS, IV-2SLS, and quantile regression techniques. We find that AI and robotics significantly promote technological innovation in China, with especially pronounced implications for cities at or below the technological frontier. These technologies also enhance the returns to science and technology (S&T) investment. Its novelty lies in framing AI and robotics as policy substitutes and tools for narrowing innovation divides among Chinese cities. |
| Keywords: | AI; robotics; technological innovation; Chinese cities |
| JEL: | O31 O33 R11 R58 |
| Date: | 2026–02–05 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:137040 |
| By: | Astarita, Caterina; Alcidi, Cinzia |
| Abstract: | This paper employs Phillips and Sul’s (2007, 2009) nonlinear dynamic factor model to discern patterns of EU-27 regional convergence in the standard of living as measured by GDP per capita, poverty and income inequality. It finds that the hypothesis of overall income convergence is rejected at the regional level, whereas that of club convergence is supported. The number and the composition of clubs are significantly influenced by the period considered and the length of the time series. The club convergence analysis of GDP per capita from 2000 to 2023 reveals three clubs, with the largest club comprising regions with a medium level of GDP per capita. After 2007, the clubs' transition paths show a moderate diverging trend: the clubs systematically above (below) the cross-country mean diverge upward (downward) from the mean. Capital regions and metropolitan areas are generally concentrated in the highest club, suggesting a tendency towards polarisation following the urban-rural divide. The likelihood of being part of the high-income club is positively correlated with the share of manufacturing and high-end/high-skill services. By contrast, a large share of the low-skill service sector negatively affects such a likelihood. Additionally, digital transformation, globalisation and migration are all associated with a higher probability of being in the high-income club. Similar to GDP per capita, the hypothesis of overall convergence in income poverty and inequality is rejected, whereas club convergence is confirmed. For both indicators, a higher number of clubs than for income is identified. The transition paths of the two largest clubs—which cover the majority of EU regions—remain relatively stable and close to the mean; however, smaller clubs show strong separating dynamics, either towards higher or lower levels of poverty and inequality. Better labour market and educational outcomes are associated with a greater probability of being in low-poverty and low-inequality clubs and appear better predictors of membership in low-poverty and low-inequality clubs than globalisation and migration. Overall, the paper suggests that the process of EU convergence has not stopped; however, regional dynamics are heterogeneous. |
| Keywords: | Club convergence, Dynamic factor model, EU integration, Income, NUTS 2 regions, Inequality, Poverty |
| JEL: | C21 I32 O47 R11 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126984 |
| By: | Sarthak Joshi (School of Economics, University of Edinburgh) |
| Abstract: | Labor demand shocks unfold unevenly across space. I show that the resulting spatial mismatch can disproportionately impact women’s employment due to gender-based differences in the propensity to commute. My empirical strategy uses rising Chinese import competition in the early 2000s to generate variation in the spatial distribution of work within commuting zones in India. Rising trade exposure caused firms to expand in the urban core and contract in the rural periphery. In areas where firms reduced hiring, women’s employment was significantly lower than men’s after 10 years. While men started commuting across the rural-urban boundary to take up jobs in expanding sectors, women either switched to locally available agriculture or dropped out of the labor force. In line with women being more reliant on public transport, gender gaps are smaller in commuting zones with better bus connectivity. I find similar negative impacts for women regardless of marital status and education level, suggesting that results are not driven by household-level constraints or increasing demand for skilled labor. My findings are consistent with the presence of gendered commuting frictions stemming from a lack of comfortable and safe commuting options for women in India. In the last part of the paper, I use a spatial general equilibrium model to show that relaxing such frictions would have mitigated the observed decline in female labor force participation in India between 2001 and 2011 by 30%, increasing total output by 0.4%. |
| Keywords: | Female labour force participation, Commuting, Spatial distribution of economic activity, India. |
| JEL: | F16 J01 J16 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:edn:esedps:323 |
| By: | Gril, Lorena; Hossain, Md Jamal; Tzavidis, Nikos; Rendtel, Ulrich |
| Abstract: | The availability of geocoordinates offers valuable insights into spatial patterns of economic, demographic and health outcomes. However, disclosing the exact geolocation of statistical units to secondary analysts contravenes the responsible use of data. To protect privacy, anonymisation methods are used. A commonly applied anonymisation method is the one used by Demographic and Health Surveys (DHS). The DHS anonymisation scheme works by first aggregating data at small spatial units followed by random (donut) displacement of the geocoordinates. It is reasonable for secondary analysts to be concerned about the impact of anonymisation on the analyses. In this paper, the DHS anonymisation scheme is used as a basis for studying how anonymisation impacts on kernel density estimation. We propose methodology to account for the impact of the anonymisation process on density estimation. The proposed methodology is based on deriving the distribution of the true coordinates given the observed (anonymised) coordinates. Density estimation is then implemented by using the theoretical distribution and an iterative algorithm that accounts for both aggregation and displacement. The aim is to approximate the original population density using generated pseudo-coordinates under the assumption that the anonymisation process is known. The proposed method is illustrated by using DHS data from the Rajshahi Division in Bangladesh to estimate the density of households below the poverty line. The results show that accounting for measurement error due to anonymisation leads to a more accurate picture of the spatial distribution of poverty. |
| Keywords: | Aggregation, Confidentiality, Measurement error, Random (donut) displacement |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:fubsbe:336811 |
| By: | Croicu, Mihai |
| Abstract: | The proliferation of large-scale, geographically disaggregated data on armed conflicts, protests, and similar events has opened new avenues of research, but has also introduced significant data quality challenges. A notable yet often overlooked issue involves observations with “known geographic imprecision” (KGI), where event locations are unknown and instead arbitrarily assigned by dataset authors. Although this issue is widely recognized and accounts for up to a quarter of observations in datasets like UCDP GED, it is rarely addressed by users. This paper presents a stochastic method derived from the multiple-imputation literature, employing spatio-temporal Gaussian processes and leveraging latent actor-conflict features in the data to enhance location accuracy. Extensive Monte-Carlo simulations demonstrate that this approach substantially enhances the accuracy of these observations and improves predictive performance beyond the state-of-the-art when applied out-of-sample. Additionally, an adapted version of the UCDP GED dataset that employs this new procedure is provided, showcasing the practical application and benefits of the methodology. |
| Date: | 2026–02–12 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:5bcn9_v1 |
| By: | Gold, Robert; Schrader, Klaus |
| Abstract: | STRING (South Western Baltic Sea Transregional Region - Implementing New Geography) is a regional cooperation of urban centers and regions in the Nordic countries and Northern Germany. The study shows that the member countries of STRING have developed dynamically over the last decades, both economically and institutionally. Economic growth has been driven by the urban agglomerations, but the less densely populated areas have benefitted as well. Altogether, STRING seems on a stable growth trajectory. The analyses suggest that STRING may well be on the way to integrating into a mega-region in the sense of theory. However, national borders still provide significant obstacles to economic exchange within the STRING region. The authors observe that the STRING organization provides a suitable institutional framework for mitigating administrative barriers to economic exchange by improving coordination between the local and regional decisionmakers. Still, they conclude that the heterogenous membership structure of STRING may complicate its further integration, due to differing interests, competencies, and resources. Based on their findings, they suggest a two-sided approach: On the one hand, strengthening the mandate of the STRING Secretariat as an agency in policy areas of universal interest, specifically vis-à-vis national governments and the European Union. On the other hand, allowing for optionality in the members' involvement in cooperative projects. |
| Abstract: | STRING (South Western Baltic Sea Transregional Region-Implementing New Geography) ist eine regionale Kooperation von urbanen Zentren und Regionen in den nordischen Ländern und Norddeutschland. Die Studie zeigt, dass sich die Mitgliedsregionen von STRING in den letzten Jahrzehnten sowohl wirtschaftlich als auch institutionell dynamisch entwickelt haben. Das Wirtschaftswachstum wurde von den städtischen Ballungsräumen getrieben, aber auch die weniger dicht besiedelten Gebiete haben davon profitiert. Da STRING insgesamt auf einem stabilen Wachstumskurs zu sein scheint, kommen die Autoren zu dem Schluss, dass STRING auf einem guten Weg ist, sich zu einer Megaregion im Sinne der Theorie zu entwickeln. Allerdings sind nationale Grenzen nach wie vor erhebliche Hindernisse für den wirtschaftlichen Austausch innerhalb der STRING-Region. Die Autoren stellen fest, dass die STRING-Organisation einen geeigneten institutionellen Rahmen für den Abbau administrativer Hindernisse, die den wirtschaftlichen Austausch hemmen, bietet, indem sie die Koordination zwischen lokalen und regionalen Entscheidungsträgern verbessert. Sie kommen aber auch zu dem Schluss, dass die heterogene Mitgliedsstruktur von STRING aufgrund unterschiedlicher Interessen, Kompetenzen und Ressourcen die weitere Integration erschweren könnte. Vor dem Hintergrund ihrer Ergebnisse schlagen sie einen zweigleisigen Ansatz vor: Einerseits sollte das Mandat des STRING-Sekretariats als Vertretung in Politikbereichen von allgemeinem Interesse gestärkt werden, insbesondere gegenüber den nationalen Regierungen und der Europäischen Union. Andererseits sollen die Mitglieder frei entscheiden können, inwieweit sie sich an Kooperationsprojekten beteiligen möchten. |
| Keywords: | regional policy, economic integration, agglomeration economies, spatial planning, connectivity, global competitiveness, Schleswig-Holstein, Nordic Countries, Regionalpolitik, wirtschaftliche Integration, Agglomerationseffekte, Raumplanung, Konnektivität, globale Wettbewerbsfähigkeit, Schleswig-Holstein, nordische Länder |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkbw:336790 |