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on Economic Geography |
| By: | Roberto Patuelli (Institute for Economic Research (IRE), University of Lugano, Switzerland; The Rimini Centre for Economic Analysis, Italy); Norbert Schanne (Institute for Employment Research (IAB), Nuremberg, Germany); Daniel A. Griffith (School of Economic, Political and Policy Sciences, University of Texas at Dallas, USA); Peter Nijkamp (Department of Spatial Economics, VU University Amsterdam, The Netherlands) |
| Abstract: | The geographical distribution and persistence of regional/local unemployment rates in heterogeneous economies (such as Germany) have been, in recent years, the subject of various theoretical and empirical studies. Several researchers have shown an interest in analysing the dynamic adjustment processes of unemployment and the average degree of dependence of the current unemployment rates or gross domestic product from the ones observed in the past. In this paper, we present a new econometric approach to the study of regional unemployment persistence, in order to account for spatial heterogeneity and/or spatial autocorrelation in both the levels and the dynamics of unemployment. First, we propose an econometric procedure suggesting the use of spatial filtering techniques as a substitute for fixed effects in a panel estimation framework. The spatial filter computed here is a proxy for spatially distributed region-specific information (e.g., the endowment of natural resources, or the size of the ‘home market’) that is usually incorporated in the fixed effects coefficients. The advantages of our proposed procedure are that the spatial filter, by incorporating region-specific information that generates spatial autocorrelation, frees up degrees of freedom, simultaneously corrects for time-stable spatial autocorrelation in the residuals, and provides insights about the spatial patterns in regional adjustment processes. In the paper we present several experiments in order to investigate the spatial pattern of the heterogeneous autoregressive coefficients estimated for unemployment data for German NUTS-3 regions. |
| Keywords: | unemployment persistence, dynamic panel, hysteresis, spatial filtering, fixed effects |
| JEL: | C21 C23 R12 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:lug:wpaper:1001&r=geo |
| By: | Meijers, E.J.; Burger, M.J. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University) |
| Abstract: | Recent concepts as megaregions and polycentric urban regions emphasize that external economies are not confined to a single urban core, but shared among a collection of close-by and linked cities. However, empirical analyses of agglomeration and agglomeration externalities so-far neglects the multicentric spatial organization of agglomeration and the possibility of ‘sharing’ or ‘borrowing’ of size between cities. This paper takes up this empirical challenge by analyzing how different spatial structures, in particular the monocentricity – polycentricity dimension, affect the economic performance of U.S. metropolitan areas. OLS and 2SLS models explaining labor productivity show that spatial structure matters. Polycentricity is associated with higher labor productivity. This appears to justify suggestions that, compared to relatively monocentric metropolitan areas, agglomeration diseconomies remain relatively limited in the more polycentric metropolitan areas, while agglomeration externalities are indeed to some extent shared among the cities in such an area. However, it was also found that a network of geographically proximate smaller cities cannot provide a substitute for the urbanization externalities of a single large city. |
| Keywords: | polycentricity;dispersion;labor productivity;urbanization externalities |
| Date: | 2009–12–08 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureri:1765017431&r=geo |
| By: | Pascal Mossay; Pierre M. Picard (CREA, University of Luxembourg) |
| Abstract: | Social interactions are at the essence of societies and explain the gathering of in- dividuals in villages, agglomerations, or cities. We study the emergence of multiple agglomerations as resulting from the interplay between spatial interaction external- ities and competition in the land market. We show that the geographical nature of the residential space tremendously a¤ects the properties of spatial equilibria. In particular, when agents locate on an open land strip (line segment), a single city emerges in equilibrium. In contrast, when the spatial economy extends along a closed land strip (circumference), multiple equilibria with odd numbers of cities arise. Spatial equilibrium configurations involve a high degree of spatial symmetry in terms of city size and location, and can be Pareto-ranked. |
| JEL: | A10 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:09-02&r=geo |
| By: | Helena Marques (Universitat de les Illes Balears); Gabriel Pino (Universidad de Concepción, Chile); J.D.Tena (Universidad di Sassari, Italia y Universidad Carlos III, Spain) |
| Abstract: | This paper provides empirical evidence of the role of spatial factors on the determination of inflation dynamics for a representative set of tradable commodities in Chile. We present a simple model that explains inflation divergence across regions in a monetary union with similar preferences as a consequence of the geographical allocation of producers in the different regions. Our results indicate that spatial allocation together with transport costs are important determinants of regional inflation while macroeconomic common factors do not play an important role in this process. Existing literature had obtained the opposite result for Europe and the reasons for that difference warrant further investigation. Moreover, we find that geographical distance seems to be a more appropriate measure of neighbourhood than the adjacency of regions. |
| Keywords: | regional inflation dynamics, space-time models, Chile |
| JEL: | E31 E52 E58 R11 C23 C21 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ubi:deawps:40&r=geo |
| By: | Klaus Desmet (Universidad Carlos III de Madrid and CEPR); Esteban Rossi-Hansberg (Princeton University) |
| Abstract: | We present a theory of spatial development. A continuum of locations in a geographic area choose each period how much to innovate (if at all) in manufacturing and services. Locations can trade subject to transport costs and technology diffuses spatially across locations. The result is an endogenous growth theory that can shed light on the link between the evolution of economic activity over time and space. We apply the model to study the evolution of the U.S. economy in the last few decades and find that the model can generate the reduction in the employment share in manufacturing, the increase in service productivity in the second part of the 1990s, the increase in land rents in the same period, as well as several other spatial and temporal patterns. |
| Date: | 2009–12–16 |
| URL: | http://d.repec.org/n?u=RePEc:imd:wpaper:wp2009-18&r=geo |
| By: | Jeffrey P. Cohen; Cletus C. Coughlin |
| Abstract: | One might expect that houses closer to an airport and those in higher minority population neighborhoods experience more airport noise. We find evidence supporting these conjectures when estimating a standard ordered probit model for houses sold near the Atlanta airport. However, because the various neighborhood demographics surrounding the airport can be heterogeneous, and the noise contours are not necessarily correlated with distance in certain neighborhoods, we hypothesize that the impacts of explanatory variables on the probability of greater noise vary across space. We explore spatial heterogeneity by estimating ordered probit locally weighted regressions (OPLWR). These results differ from those using a standard ordered probit model. Moreover, we find notable differences in parameter estimates for different observations (i.e., houses). Even in relatively small areas, our results imply that the standard ordered probit model can generate biased estimates. |
| Keywords: | Airports ; Regional economics |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2009-058&r=geo |
| By: | Suedekum, Jens (University of Duisburg-Essen); Wolf, Katja (IAB, Nürnberg); Blien, Uwe (IAB, Nürnberg) |
| Abstract: | During the last decade there have been marked changes in the composition of the non-native workforce in the German labour market. In particular there has been a notable increase in the diversity of nationalities of which the foreign workforce is composed. In this paper we investigate the effects of this diversity for native employees. Our analysis is conducted at the local level and uses a panel of 326 Western German regions over the time period 1995-2006. When considering high-skilled foreign workers, we find that both the size of this group and the diversification into different nationalities raise local wages and employment for native employees. For low-skilled foreign workers we find negative size effects. However, these negative effects can be partly offset if the group of low-skilled foreigners is culturally diversified. Our results imply that diversity raises productivity at the local level, but that it is important to distinguish the skill composition of the foreign workforce. These findings remain robust in a variety of robustness checks that take into account omitted variable bias, self-selection of foreigners into particular regions, and spatial autocorrelation. |
| Keywords: | regional labour markets, cultural diversity, immigration, spatial equilibrium |
| JEL: | R23 J21 J31 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4619&r=geo |
| By: | Klaus Desmet (Universidad Carlos III de Madrid and CEPR); Esteban Rossi-Hansberg (Princeton University) |
| Abstract: | It has long been recognized that the forces that lead to the agglomeration of economic activity and to aggregate growth are similar. Unfortunately, few formal frameworks have been advanced to explore this link. We critically discuss the literature and present a simple framework that can circumvent some of the main obstacles we identify. We discuss the main characteristics of an equilibrium allocation in this dynamic spatial framework, present a numerical example to illustrate the forces at work, and provide some supporting empirical evidence. |
| Keywords: | dynamic spatial models; technology diffusion; spillovers; trade; factor mobility; growth |
| JEL: | O3 O4 R1 |
| Date: | 2009–12–16 |
| URL: | http://d.repec.org/n?u=RePEc:imd:wpaper:wp2009-16&r=geo |
| By: | Pierre M. Picard; David E. Wildasin (CREA, University of Luxembourg) |
| Abstract: | Economic regions, such as urban agglomerations, face external demand and price shocks that produce income risk. Workers in large and diversified agglomerations may benefit from reduced wage volatility, while firms may outsource the production of intermediate goods and realize benefits from Chamberlinian externalities. Firms may also protect workers from wage risks through fixed wage contracts. This paper explores the relationships between firms’ risks, workers’ contracts, and the structure of production in cities. |
| JEL: | R12 R23 J31 J65 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:09-05&r=geo |
| By: | Pierre M. Picard; Dao-Zhi Zeng (CREA, University of Luxembourg) |
| Abstract: | This paper investigates the joint impact of the first nature and the second nature forces on industry location. Towards this aim, we develop a two-region new economic geography model where local factor congestion and location advantages compete with demand linkages and product market crowding. In particular we study the case of absolute location advantage in a single industry model and the case of comparative advantages in a two-industry model. We characterize the structure of industries and discuss the possibilities of catastrophic changes, endogenous industrial asymmetries and specialization. We find that absolute location advantage are associated with a smooth agglomeration process and comparative advantages with a catastrophic process. |
| JEL: | R10 R13 F12 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:09-10&r=geo |
| By: | Birkelöf, Lena (Department of Economics, Umeå University) |
| Abstract: | The thesis consists of an introductory part and three self-contained papers. <p> Paper [I] studies the determinants of the differences in expenditure on services for functionally impaired individuals among municipalities in Sweden. A spatial autoregressive model is used in order to test whether the decisions on the expenditure level in a neighboring municipality affect the municipality’s own expenditure. The results show of spatial interaction among neighbors, possible due to mimicking. However, when controlling for differences among counties there is no evidence of spatial interaction. Therefore, the positive interaction first found can be interpreted either as a result of differences in the way county councils diagnose individuals or due to interaction among the neighbors in the same county. <p> Paper [II] takes advantage of a new intergovernmental grant in two ways. First, the grant is used to study the effect on municipal spending related to the grant. Second, the grant is used to test a hypothesis of spatial interaction among municipalities due to mimicking behavior. The data used pertains to the periods before and after the introduction of the grant. A fixed-effects spatial lag model is used to study the spatial interactions among municipalities. The results show that before the grant, municipalities interact with their neighbors when setting the expenditure level, while there is no evidence of interaction in the second period. This would support the hypothesis that the grants provide information to the municipalities and the need for mimicking diminishes with the grant. <p> Paper [III] examines whether local public expenditures on services to functionally impaired individuals crowd out other local public expenditures in Sweden. The hypothesis is tested on five different spending areas using a two-stage least squares (2SLS) fixed-effects model. While the results give no support for crowding out in the areas of social assistance, culture & leisure, and childcare & preschool, a negative relationship on spending for elderly & disabled care and on spending for education is found, suggesting that crowding out indeed occurs within the municipal sector. The negative relationships are significant both in a statistical and an economic sense. |
| Keywords: | Local public expenditures; Spatial econometrics; Intergovernmental grants; Spatial interaction; Intergovernmental grants; Expenditure crowding out; Functionally impaired |
| JEL: | H72 H77 I18 J14 R12 R50 |
| Date: | 2009–12–17 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0798&r=geo |
| By: | Koschatzky, Knut |
| Abstract: | This paper deals with two major dilemmas in regional innovation policy making: The dilemma that theory does not provide sufficient answers for the formulation of specific innovation policy measures addressing the problem configurations of single regions and the dilemma that role models are used as a substitute for orientation. In order to support policy learning, different approaches like evaluation, the development of innovation strategies and regional foresight are discussed. -- |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fisifr:r62009&r=geo |
| By: | Koschatzky, Knut; Stahlecker, Thomas |
| Abstract: | Taking the implications of the cohesion policy framework for innovation governance as a starting point, it is the objective of this paper to discuss challenges for regional policy making with regard to a policy mix that is new to regional policy makers. Based on two German regions representing convergence and competitive and employment regions it will be discussed how regional policy makers can deal with this new policy approach and what could be appropriate strategies, programmes and learning tools. What can be seen from both the Bavarian and the Saxon case study is that the two regions apply a broad mix of different innovation policy measures, supporting all innovation policy tasks with relevance to regional development. In both regions innovation policy is not a new task, but Saxony as well as Bavaria can look back to a quite long tradition in the im-plementation of this policy. Differences exist with regard to policy learning in a way that due the longer innovation policy experiences of Bavaria more sophisticated structures and activities can be found in this federal state. -- |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fisifr:r32009&r=geo |
| By: | Kroll, Henning |
| Abstract: | -- |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fisifr:r12009&r=geo |
| By: | Manuel Hidalgo Pérez (Department of Economics, Universidad Pablo de Olavide); Walter García-Fontes (Universidad Pompeu Fabra y CREA) |
| Abstract: | We estimate the strength of schooling externalities for Spanish regions over the 1981-2001 period. Our empirical work employs both main approaches available in the literature. Both methodologies yield significant externalities. Using a growth accounting exercise, we find that human capital externalities account for one half of the increase in real wages for the period between 1981 and 2001. |
| Keywords: | externalities, human capital, constant composition. |
| JEL: | I21 J31 O47 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:pab:wpaper:09.17&r=geo |
| By: | Quentin David; Alexandre Janiak; Etienne Wasmer (CREA, University of Luxembourg) |
| Abstract: | In this paper, we attempt to understand the determinants of mobility through introduc- ing the concept of local social capital. Investing in local ties is rational when workers do not expect to move to another region, and reciprocally, once local social capital is accumulated, incentives to move are reduced. We build a model to illustrate several types of complementarities: observationally close individuals may take di¤erent paths characterized by high local social capital and low mobility vs. low social capital and high propensity to move. Employment protection reinforces the accumulation of local social capital and thus reduces mobility. Externalities generate multiple equilibria in which mobility and social capital are negatively correlated across equilibria. European data supports the theory: the South of Europe is characterized by both low mobility and local social capital, while the North of Europe has higher mobility and a more general type of social capital. Within a country and at the individual level, more social capital is associated with lower mobility. |
| JEL: | A10 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:09-11&r=geo |
| By: | Yolanda K. Kodrzycki; Ana Patricia Muñoz with Lynn Browne; DeAnna Green; Marques Benton; Prabal Chakrabarti; David Plasse; Richard Walker; Bo Zhao |
| Abstract: | As part of the Federal Reserve Bank of Boston's commitment to supporting efforts to revitalize the economy of Springfield, Massachusetts, this paper analyzes the economic development approaches of other mid-sized manufacturing-oriented cities during the past half century. From among a comparison group of 25 municipalities that were similar to Springfield in 1960, the study identifies 10 "resurgent cities" that have made substantial progress in improving living standards for their residents, and that are recognized as vital communities in a broader sense by experts on urban economic development and policy. These case studies suggest that industry mix, demographic composition, and geographic position are not the key factors distinguishing the resurgent cities from Springfield. Instead, the most important lessons from the resurgent cities concern leadership and collaboration. Initial leadership in these cities came from a variety of key institutions and individuals. In some cases, the turnaround started with efforts on the part of the public sector, while in other cases nongovernmental institutions or private developers were at the forefront. Regardless of who initiated the turnaround, economic redevelopment efforts spanned decades and involved collaborations among numerous organizations and sectors. |
| Keywords: | Cities and towns ; Cities and towns - Massachusetts ; Economic policy - Massachusetts |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbpp:09-6&r=geo |
| By: | Marcelo Veracierto |
| Abstract: | This paper develops a Walrasian equilibrium theory of establishment dynamics and matching frictions and uses it to analyze business cycle fluctuations. Two scenarios are considered: one in which the matching process is subject to congestion externalities and another in which it is not. The paper finds that the scenario with congestion externalities replicates U.S. business cycle dynamics much better than the scenario with efficient matching. Reallocation shocks improve the empirical behavior of the model in terms of microeconomic adjustments but have little consequences for aggregate dynamics. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-09-14&r=geo |