|
on Economic Geography |
|
Issue of 2024–12–02
seventeen papers chosen by Andreas Koch, Institut für Angewandte Wirtschaftsforschung |
| By: | Stephen J. Redding |
| 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 |
| Date: | 2024–11–06 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2047 |
| By: | Brian C. Fujiy |
| Abstract: | I causally estimate local knowledge spillovers in R&D and quantify their importance when implementing R&D policies. Using a new administrative panel on German inventors, I estimate these spillovers by isolating quasi-exogenous variation from the arrival of East German inventors across West Germany after the Reunification of Germany in 1990. Increasing the number of inventors by 1% increases inventor productivity by 0.4%. I build a spatial model of innovation, and show that these spillovers are crucial when reducing migration costs for inventors or implementing R&D subsidies to promote economic activity. |
| Keywords: | inventors, research and development, innovation, agglomeration, spillovers |
| JEL: | F16 J61 O4 O31 R12 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:24-59 |
| By: | Gong, Huiwen (University of Stavanger); Hassink, Robert (Kiel University) |
| Abstract: | In regional studies and economic geography, interest in regional economic resilience and regional innovation policy has steadily increased in recent decades. Although these two perspectives appear to be closely related, relatively little research has elaborated on the interrelationships between them. In this chapter, we take stock of the current two key conceptual extensions of the work on regional economic resilience, i.e., 1) the simultaneous consideration of regional and value chain resilience and 2) the discussion on transformative resilience and the normative turn on regional innovation policy in economic geography and beyond. Overall, we find that the shift toward more sustainable and inclusive development is increasingly being advocated by scholars working on regional resilience or regional innovation policy, leading to increased interest in new concepts such as "transformative resilience" and "challenge-oriented/transformative regional innovation policy" in the respective research fields. However, there is relatively little evidence on how regional resilience that is transformative in nature (e.g., transformative resilience) can be fostered by the new generation of regional innovation policy and how the increasing frequency of shocks of all kinds requires new thinking in regional innovation policy. We therefore suggest four promising avenues for future research that link the hitherto largely isolated perspectives of regional resilience and regional innovation policy to explain regional economic change in the post-crisis period. |
| Keywords: | regional innovation policy; regional resilience; transformative resilience; economic geography |
| JEL: | O30 O38 R10 |
| Date: | 2024–11–12 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:lucirc:2024_015 |
| By: | Andr s Rodr guez-Pose; Javier Terrero-Davila; Neil Lee |
| Abstract: | Economic change over the past twenty years has rendered many individuals and territories vulnerable, leading to greater interpersonal and interterritorial inequality. This rising inequality is seen as a root cause of populism. Yet, there is no comparative evidence as to whether this discontent is the consequence of localised interpersonal inequality or stagnant growth in ‘left-behind’ places. This paper assesses the association between levels and changes in local GDP per capita and interpersonal inequality, and the rise of far-right populism in Europe and in the US. The analysis —conducted at small region level for Europe and county level for the US— shows that there are both similarities and differences in the factors connected to populist voting on both sides of the Atlantic. In the US, neither interpersonal inequality nor economic decline can explain populist support on their own. However, these factors gain significance when considered together with the racial composition of the area. Counties with a large share of white population where economic growth has been stagnant and where inequalities have increased supported Donald Trump. Meanwhile, counties with a similar economic trajectory but with a higher share of minorities shunned populism. In Europe, the most significant factor behind the rise of far-right populism is economic decline. This effect is particularly large in areas with a high share of immigration. |
| JEL: | D31 D72 R11 |
| Date: | 2023–04 |
| URL: | https://d.repec.org/n?u=RePEc:lis:liswps:859 |
| By: | Giuseppe Arbia; Vincenzo Nardelli |
| Abstract: | In the analysis of large spatial datasets, identifying and treating spatial outliers is essential for accurately interpreting geographical phenomena. While spatial correlation measures, particularly Local Indicators of Spatial Association (LISA), are widely used to detect spatial patterns, the presence of abnormal observations frequently distorts the landscape and conceals critical spatial relationships. These outliers can significantly impact analysis due to the inherent spatial dependencies present in the data. Traditional influence function (IF) methodologies, commonly used in statistical analysis to measure the impact of individual observations, are not directly applicable in the spatial context because the influence of an observation is determined not only by its own value but also by its spatial location, its connections with neighboring regions, and the values of those neighboring observations. In this paper, we introduce a local version of the influence function (LIF) that accounts for these spatial dependencies. Through the analysis of both simulated and real-world datasets, we demonstrate how the LIF provides a more nuanced and accurate detection of spatial outliers compared to traditional LISA measures and local impact assessments, improving our understanding of spatial patterns. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.18261 |
| By: | Hambur Wang |
| Abstract: | This study investigates the impact of industrial agglomeration on land use intensification in the Yangtze River Delta (YRD) urban agglomeration. Utilizing spatial econometric models, we conduct an empirical analysis of the clustering phenomena in manufacturing and producer services. By employing the Location Quotient (LQ) and the Relative Diversification Index (RDI), we assess the degree of industrial specialization and diversification in the YRD. Additionally, Global Moran's I and Local Moran's I scatter plots are used to reveal the spatial distribution characteristics of land use intensification. Our findings indicate that industrial agglomeration has complex effects on land use intensification, showing positive, negative, and inverted U-shaped impacts. These synergistic effects exhibit significant regional variations across the YRD. The study provides both theoretical foundations and empirical support for the formulation of land management and industrial development policies. In conclusion, we propose policy recommendations aimed at optimizing industrial structures and enhancing land use efficiency to foster sustainable development in the YRD region. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.19304 |
| By: | Berson, Clémence; Combes, Pierre-Philippe; Gobillon, Laurent; Sotura, Aurélie |
| Abstract: | We examine how agglomeration economies have influenced labour earnings in France over forty years. First, we define cities dynamically to account for their changing footprints. Our findings show that aggregate wage growth is mainly driven by growth in larger cities, rather than smaller ones or by population shifts across cities. We estimate individual wages incorporating time-varying city and individual fixed effects, and analyse how city characteristics (employment density, area, and market access) and their returns impact wage evolution. Changes in the values of these characteristics have minimal effect, but changes in their returns significantly influence wages, with notable variation across cities. Overall, aggregate wage growth in France reflects larger returns to larger city size. Our model, that incorporate the impact of agglomeration economies on city size and population, suggests that changes in returns do not drive population or area changes sufficiently to impact aggregate labour earnings, supporting our empirical findings. JEL Classification: R23, J31, J61 |
| Keywords: | agglomeration economies, endogenous city size, growth, wages |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20242997 |
| By: | Frank Neffke (Center for International Development at Harvard University); Yang Li |
| Abstract: | A growing body of research documents that the size and growth of an industry in a place depends on how much related activity is found there. This fact is commonly referred to as the "principle of relatedness." However, there is no consensus on why we observe the principle of relatedness, how best to determine which industries are related or how this empirical regularity can help inform local industrial policy. We perform a structured search over tens of thousands of specifications to identify robust – in terms of out-of-sample predictions – ways to determine how well industries fit the local economies of US cities. To do so, we use data that allow us to derive relatedness from observing which industries co-occur in the portfolios of establishments, firms, cities and countries. Different portfolios yield different relatedness matrices, each of which help predict the size and growth of local industries. However, our specification search not only identifes ways to improve the performance of such predictions, but also reveals new facts about the principle of relatedness and important trade-offs between predictive performance and interpretability of relatedness patterns. We use these insights to deepen our theoretical understanding of what underlies path-dependent development in cities and expand existing policy frameworks that rely on inter-industry relatedness analysis. |
| Keywords: | Economic Complexity, Structural Transformation, Cities |
| Date: | 2023–03 |
| URL: | https://d.repec.org/n?u=RePEc:glh:wpfacu:211 |
| By: | Hoyos, Mateo (Center for Research and Teaching in Economics); Coronado, José Alejandro; Martins, Guilherme Klein |
| Abstract: | This paper presents novel empirical evidence on the impact of trade on structural transformation. Leveraging quasi-experimental tariff variation from Brazil's trade liberalization in the 1990s, we examine its effects on regional sectoral employment shares. Building on recent cross-regional macroeconomic literature, we approximate the aggregate effects of trade on structural change by extending the traditional shift-share analysis to include estimates of spatial spillover effects, beyond the commonly reported local or direct impacts. Our findings reveal that Brazilian regions directly exposed to larger tariff reductions experienced a significant decrease in manufacturing employment shares, an increase in the primary sector, and a decline in non-tradables. Spatial spillover effects—whether based on migration or gravity links—are positive for manufacturing and the primary sector but negative for non-tradables. While positive spillovers in manufacturing partially offset local deindustrialization, the net effects remain negative and economically significant. These effects persisted for at least twenty years post-liberalization and are independent of potential confounders, including alternative structural change hypotheses and other shocks to Brazil's economy during the study period. Our results are consistent with the theoretical literature on trade and structural transformation which emphasizes the significance of comparative advantage. |
| Date: | 2024–11–01 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:rfqvt |
| By: | David Castells-Quintana (Department of Applied Economics, Univ Autonoma de Barcelona, 08193 Bellaterra, Barcelona, Spain); Roberto Gasquez (Department of Economic History, Institutions, Politics and World Economy. Univ de Barcelona, 08034, Barcelona, Spain) |
| Abstract: | The connection between sports and development has long been highlighted in academia and policy debates. But the extent to which the success of professional sport teams can spur economic dynamism has hardly been studied in the literature. In this paper, we look at the potential connection between sporting success and economic development. We focus on club football and economic dynamism in European regions. To do so, we build a unique dataset with information for 395 football clubs, matched with economic information for 295 NUTS3 European regions, for the 2000-2020 period. Using several econometric techniques, we find robust evidence of a positive connection between club success and regional economic performance. This connection seems especially strong when sporting success comes from relatively modest clubs. |
| Keywords: | sport; football; regions; Europe; development. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:uab:wprdea:wpdea2402 |
| By: | Estrin, Saul; Hu, Yuan; Shapiro, Daniel; Zhang, Peng |
| Abstract: | Theory and evidence from developed economies suggests that innovation activities benefit from agglomeration economies associated with urban economic density. However, despite the fact that eighteen of the world’s top twenty cities are in developing countries, we do not know whether agglomeration affects innovation in the same way in developing countries. We propose that, while there are still agglomeration benefits, the development path followed by cities in developing countries also creates significant agglomeration costs and these act to limit innovation. We build a unique database to measure consistently both urban economic density and innovation across a large number of developing countries. Based on geospatial information, we combine data on nightlights at the city level to proxy urban density with information on innovation activity at the firm level. We find that in developing countries, as urban economic density increases, innovation first increases and then begins to decrease beyond a certain point, with the decline being most prominent in the largest cities. That is, the largest cities in developing countries are not able to act as sustainable sources of innovation. Cities in developing countries therefore display different patterns of agglomeration from those documented in the literature focused on developed countries. Our analysis explores the relationship between UN Sustainable Development Goal (SDG) 9 which fosters innovation, and SDG 11 which promotes sustainable and resilient cities. Our results suggest the importance of addressing urban agglomeration costs as a means to facilitate innovative activity. |
| Keywords: | innovation; nightlights; urban agglomeration; sustainable cities; developing countries; World Bank Enterprise Surveys |
| JEL: | J1 |
| Date: | 2024–11–05 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:125983 |
| By: | Ali Sina Önder (University of Portsmouth); Sascha Schweitzer (Reutlingen University); Olga Tcaci (TUD Dresden University of Technology) |
| Abstract: | We estimate the impact of technological innovation on regional labor market outcomes. Our identification strategy exploits pre-reunification complementarities in innovation between East and West Germany. We employ individual-level data from the German Socio-Economic Panel to analyze labor market out- comes. Individuals’ income in West German counties with pre-reunification complementarities increased by 1.3%-1.5% on average after reunification. The effect is amplified when disentangling for different occupations: Income increases by 27%-29%, self-employment increases significantly, unemployment remains unaffected. The use of East German know-how in West German patents after reunification is driven by the migration of East German inventors to West German counties. |
| Keywords: | Economic Development; Patent Analysis; Knowledge Complementarities; Occupations; German Reunification |
| JEL: | J24 O31 O33 R11 |
| Date: | 2024–11–08 |
| URL: | https://d.repec.org/n?u=RePEc:pbs:ecofin:2024-07 |
| By: | Andr s G mez-Lobo; Daniel Oviedo |
| Abstract: | We examine three dimensions of spatial inequality in Latin America and the Caribbean (LAC): between rural and urban areas (rural-urban divide), between large and small cities (metropolitan bias or centralization) and within metropolitan areas (urban segregation). As a first approach, we use information from the Luxembourg Income Study survey data to decompose an inequality measure between urban and rural areas and between large and smaller cities for 9 LAC countries and 13 developed countries. The results indicate that LAC countries are in general more unequal than developed economies along all spatial dimensions. However, there are several salient structural differences between both groups of countries worth noting. First, the rural-urban divide is much larger in absolute terms as well as relative (to overall inequality) terms in LAC compared to the developed countries in the sample. Second, there is some evidence pointing to a centralization or metropolitan bias in the LAC region compared to the developed countries. Within urban inequality measure in smaller cities is the largest decomposition term both in LAC as well as developed countries. This implies that more emphasis should be placed on poverty rates in smaller urban areas and not just large metropolitan areas. As a second approach we characterize the structure of Latin American cities with those of other regions of the world using data from the Atlas of Urban Expansion (AUE) (Blei and Angel, 2021). Finally, we also summarize some case studies to better understand the issues surrounding segregation in LAC urban areas. One feature of LAC is the concentration of the poor in informal settlements in the periphery of cities, generating unequal access to employment, education, and health services as well as other mobility related issues. Overall, we conclude that poverty has a spatial or territorial dimension in LAC that needs to be addressed. Although there is no single policy to tackle the complexity of spatial inequality, in the final section we discuss the importance of infrastructure investments and transport policies to address the issues raised in this paper. |
| Date: | 2023–10 |
| URL: | https://d.repec.org/n?u=RePEc:lis:liswps:869 |
| By: | Saowaruj RATTANAKHAMFU (Thailand Development Research Institute (TDRI)); Naparit CHANTAWASINKUL (Thailand Development Research Institute (TDRI)); Nuttawut LAKSANAPANYAKUL (Thailand Development Research Institute (TDRI)); Nuttawut Warakorn AWUTPANYAKUL (Thailand Development Research Institute (TDRI)); Nuttawut Natcha YONGPHIPHATWONG (Thailand Development Research Institute (TDRI)) |
| Abstract: | This study investigates the relationship between urban density and productivity, specifically wages adjusted for provincial price differences, in four major cities of Thailand: Bangkok, Chiang Mai, Khon Kaen, and Songkla. Utilising the ArcGIS survey of Khon Thai 4.0 data, which measures urban density as the number of inhabitants per grid cell area, we employ the two-stage least squares estimation technique to address endogeneity concerns. Our findings demonstrate that higher urban density leads to an 8.9% increase in individual hourly wages at the 5% significance level. This supports the notion that densely populated urban areas foster enhanced productivity through agglomeration economies and knowledge spillovers. Furthermore, we observe the expected impacts of education, age, and gender on wages. Higher education is associated with an 8.2% increase in wages, highlighting its influence on labour productivity. Age exhibits an inverted U-shaped relationship, indicating that experience and skill development lead to higher wages up to a certain threshold. Male workers earn approximately 5.83% more than their female counterparts, revealing a gender wage gap. Moreover, our analysis reveals contrasting effects of higher urban density on skilled and unskilled workers. Skilled workers experience a significant 15.2% increase in wages, whereas the impact on unskilled workers remains modest at around 1.8%. Additionally, education significantly contributes to higher wages for both skilled and unskilled workers. This study provides valuable policy implications for promoting labour productivity and addressing urban development challenges in Thailand. |
| Keywords: | Urban development; Urban density; Labour productivity; Wage differentials |
| JEL: | J24 J31 O15 R11 R12 |
| Date: | 2024–06–18 |
| URL: | https://d.repec.org/n?u=RePEc:era:wpaper:dp-2024-12 |
| By: | Henderson, J. Vernon; Thisse, Jacques-François |
| JEL: | J1 |
| Date: | 2024–11–30 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:125675 |
| By: | McNeil, Andrew; Luca, Davide; Lee, Neil |
| Abstract: | Does growing up in a high-economic adversity area matter for individual economic, cultural, and political views? Despite a significant focus upon the effect of birthplace on economic outcomes, there is less evidence on how local economic conditions at birth shape individual attitudes over the long-term. This paper links the British Household Panel Survey (BHPS) from English and Welsh respondents with historic localised information on unemployment, our measure of economic adversity. Our results, which control for composition effects, family background, and sorting of people across places, show that being born into a high-unemployment Local Authority has a significant, long-term impact on individuals. Birthplace matters beyond economic outcomes, as being born into a Local Authority of high unemployment makes individuals believe in more government intervention in jobs, less progressive on gender issues, and less likely to support the Conservative Party. |
| Keywords: | lifetime mobility; place of birth; political attitudes; social values; unemployment |
| JEL: | J31 J38 J62 R11 R23 |
| Date: | 2023–07–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:119354 |
| By: | Lennard Schlattmann (University of Bonn) |
| Abstract: | Policies to mitigate climate change are high on the political agenda and their distributional consequences are actively discussed. This paper makes two contributions to this discussion. First, it empirically identifies the spatial dimension between rural and urban households as important for the distributional consequences of carbon taxes, because the average annual carbon footprint of rural households in Germany is 2.2 tons higher than that of urban households, around 12 percent of the average carbon footprint. Second, it builds a quantitative spatial general equilibrium model to evaluate different policies of recycling carbon tax revenues in terms of their redistributive effects and their political support along the transition to clean technologies. I find that recycling carbon tax revenues as lump-sum transfers redistributes from rural to urban households. For a carbon tax of 300 Euros per ton, the difference in the present value of net transfers is 8, 000 Euros. In contrast, place-based transfers avoid this spatial redistribution without reducing the speed of the transition to clean technologies. This has important implications for the political support for these policies, as place-based transfers allow to set a higher carbon tax under the constraint that the policy is beneficial to a majority of households in both regions. Finally, carbon taxes have sizeable general equilibrium effects on housing prices, increasing those of non-emitting houses by 5 percent, while decreasing those of carbon emitting houses by the same amount. |
| Keywords: | Climate change, Inequality, Tax and Transfer policies, Spatial Economics |
| JEL: | E21 H23 Q52 R13 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:345 |