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on Economic Geography |
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Issue of 2025–05–05
nine papers chosen by Andreas Koch, Institut für Angewandte Wirtschaftsforschung |
| By: | Elena Faieta; Zhexin Feng; Michel Serafinelli |
| 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 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11699 |
| By: | Marjan Petreski; Magdalena Olczyk |
| Abstract: | This study examines the impact of foreign direct investment (FDI) on job creation across 109 regions in the old EU member states from 2012 to 2023. Using dynamic and spatial econometric models combined with a unique dataset of FDI projects, we find that increased FDI inflows significantly enhance regional job creation, but the relationship is nonlinear. Sectoral specialization plays a crucial role, as more concentrated FDI inflows lead to higher employment growth. Furthermore, FDI-driven job creation exhibits significant spatial spillover effects. However, regions attracting high-value FDI jobs, such as those in R&D and management, tend to experience slower overall employment growth. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2503.23999 |
| By: | Wang, Jian-xiu; Hou, Dan-dan; Zhong, Shun-chang; You, Yun-tian |
| Abstract: | Research conducted worldwide has established that industrial agglomeration can improve firm productivity, regardless of policy and institutional factors. In this study, we utilize firm-level data from the Chinese Industrial Enterprises Database (CIED) for the period of 1998-2014 to analyze the relationship between induced-agglomeration policy and the productivity of firms operating within industrial parks while considering productivity and regional heterogeneities. To ensure the reliability of our results, we adopt various identification strategies that produce consistent outcomes. Additionally, we examine the impact of induced-agglomeration policy on firm survival in industrial parks by utilizing a Cloglog survival model. Our findings indicate that induced-agglomeration policy has a negative effect on the productivity of firms operating within industrial parks, with the negative effects diminishing as TFP increases and being stronger in less developed areas. We also find that induced-agglomeration policy can effectively enhance the lifespan of firms, particularly in less developed regions. We then point out policy optimization and other future research topics. |
| Keywords: | Keywords induced-agglomeration policy·productivity·survival·China |
| JEL: | C0 O25 O4 O40 |
| Date: | 2025–04–14 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124377 |
| By: | Enrico Moretti; Moises Yi |
| Abstract: | Economists have long hypothesized that large and thick labor markets facilitate the matching between workers and firms. We use administrative data from the LEHD to compare the job search outcomes of workers originally in large and small markets who lost their jobs due to a firm closure. We define a labor market as the Commuting Zone×industry pair in the quarter before the closure. To account for the possible sorting of high-quality workers into larger markets, the effect of market size is identified by comparing workers in large and small markets within the same CZ, conditional on workers fixed effects. In the six quarters before their firm’s closure, workers in small and large markets have a similar probability of employment and quarterly earnings. Following the closure, workers in larger markets experience significantly shorter non-employment spells and smaller earning losses than workers in smaller markets, indicating that larger markets partially insure workers against idiosyncratic employment shocks. A 1 percent increase in market size results in a 0.015 and 0.023 percentage points increase in the 1-year re-employment probability of high school and college graduates, respectively. Displaced workers in larger markets also experience a significantly lower need for relocation to a different CZ. Conditional on finding a new job, the quality of the new worker-firm match is higher in larger markets, as proxied by a higher probability that the new match lasts more than one year; the new industry is the same as the old one; and the new industry is a “good fit” for the worker’s college major. Consistent with the notion that market size should be particularly consequential for more specialized workers, we find that the effects are larger in industries where human capital is more specialized and less portable. Our findings may help explain the geographical agglomeration of industries—especially those that make intensive use of highly specialized workers—and validate one of the mechanisms that urban economists have proposed for the existence of agglomeration economies. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-22 |
| By: | Matteo Straccamore; Matteo Bruno; Andrea Tacchella |
| Abstract: | Debates over the trade-offs between specialization and diversification have long intrigued scholars and policymakers. Specialization can amplify an economy by concentrating on core strengths, while diversification reduces vulnerability by distributing investments across multiple sectors. In this paper, we use patent data and the framework of Economic Complexity to investigate how the degree of technological specialization and diversification affects economic development at different scales: metropolitan areas, regions and countries. We examine two Economic Complexity indicators. Technological Fitness assesses an economic player's ability to diversify and generate sophisticated technologies, while Technological Coherence quantifies the degree of specialization by measuring the similarity among technologies within an economic player's portfolio. Our results indicate that a high degree of Technological Coherence is associated with increased economic growth only at the metropolitan area level, while its impact turns negative at larger scales. In contrast, Technological Fitness shows a U-shaped relationship with a positive effect in metropolitan areas, a negative influence at the regional level, and again a positive effect at the national level. These findings underscore the complex interplay between technological specialization and diversification across geographical scales. Understanding these distinctions can inform policymakers and stakeholders in developing tailored strategies for technological advancement and economic growth. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2503.22666 |
| By: | Maria Vagliasindi; Nisan Gorgulu |
| Abstract: | This paper takes stock of the literature on infrastructure and jobs published since the early 2000s, using a conceptual framework to identify the key channels through which different types of infrastructure impact jobs. Where relevant, it highlights the different approaches and findings in the cases of energy, digital, and transport infrastructure. Overall, the literature review provides strong evidence of infrastructure’s positive impact on employment, particularly for women. In the case of electricity, this impact arises from freeing time that would otherwise be spent on household tasks. Similarly, digital infrastructure, particularly mobile phone coverage, has demonstrated positive labor market effects, often driven by private sector investments rather than large public expenditures, which are typically required for other large-scale infrastructure projects. The evidence on structural transformation is also positive, with some notable exceptions, such as studies that find no significant impact on structural transformation in rural India in the cases of electricity and roads. Even with better market connections, remote areas may continue to lack economic opportunities, due to the absence of agglomeration economies and complementary inputs such as human capital. Accordingly, reducing transport costs alone may not be sufficient to drive economic transformation in rural areas. The spatial dimension of transformation is particularly relevant for transport, both internationally—by enhancing trade integration—and within countries, where economic development tends to drive firms and jobs toward urban centers, benefitting from economies scale and network effects. Turning to organizational transformation, evidence on skill bias in developing countries is more mixed than in developed countries and may vary considerably by context. Further research, especially on the possible reasons explaining the differences between developed and developing economies, is needed. |
| Date: | 2025–04–03 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11096 |
| By: | MacKinnon, Danny; Amarouche, Maryame; Béal, Vincent; Cauchi-Duval, Nicolas; Franklin, Rachel S. (Newcastle University); Kinossian, Nadir; Lang, Thilo; Le Petit-Guerin, Mehdi; Leibert, Tim; Nafaa, Nora |
| Abstract: | For over a decade, concern has mounted about places in Europe and North America that have been ‘left behind’ by the growth and prosperity experienced in more economically dynamic regions. This briefing paper summarises the findings from the ‘Beyond Left Behind Places’ project. Filling a gap in the policy debate, this study included qualitative research with residents of economically ‘left behind’ regions in France, Germany and the UK to gather their experiences and perceptions. The qualitative research was focused on six case studies areas, two in each country. It aimed to give agency and voice to people living in ‘left behind’ areas and draw on their experiences and priorities to inform the development of locally tailored policy responses. The case studies were designed to explore residents’ employment activities and access to services, alongside their perceptions of their areas and of recent place-based policies. Based on our findings, we outline a set of directions and recommendations on policies ‘for’ and ‘with’ ‘left behind places. |
| Date: | 2025–03–03 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:5hfxm_v1 |
| By: | Sascha Becker (Warwick University); David Boll (Warwick University); Hans-Joachim Voth |
| Abstract: | Spatial unit roots can lead to spurious regression results. We present a brief overview of the methods developed in M ̈uller and Watson (2024) to test for and correct for spatial unit roots. We also introduce a suite of Stata commands (-spur-) implementing these techniques. Our commands exactly replicate results in M ̈uller and Watson (2024) using the same Chetty et al. (2014) data. We present a brief practitioner’s guide for applied researchers. |
| JEL: | C21 C22 C52 C87 N0 P0 R12 R15 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:2502 |
| By: | Rüttenauer, Tobias |
| Abstract: | This handbook chapter provides an essential introduction to the field of spatial econometrics, offering a comprehensive overview of techniques and methodologies for analysing spatial data in the social sciences. Spatial econometrics addresses the unique challenges posed by spatially dependent observations, where spatial relationships among data points can significantly impact statistical analyses. The chapter begins by exploring the fundamental concepts of spatial dependence and spatial autocorrelation, and highlighting their implications for traditional econometric models. It then introduces a range of spatial econometric models, particularly spatial lag, spatial error, and spatial lag of X models, illustrating how these models accommodate spatial relationships and yield accurate and insightful results about the underlying spatial processes. The chapter provides an intuitive understanding of these models compare to each other. A practical example on London house prices demonstrates the application of spatial econometrics, emphasising its relevance in uncovering hidden spatial patterns, addressing endogeneity, and providing robust estimates in the presence of spatial dependence. |
| Date: | 2024–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:mq7te_v2 |