Gis a job: What use Geographical Information Systems in Spatial Economics
Abstract: Geographical Information Systems (GIS) are used for inputting, storing, managing, analysing and mapping spatial data. This article argues that each of these functions can help researchers interested in spatial economics. In addition, GIS provide access to new data which is both interesting in its own right, but also as a source of exogenous variation.
Download the paper. Published in Journal of Regional Science
Decomposing the growth
in residential land in the United States
with Diego Puga and Matt Turner
Abstract: This paper decomposes the growth in land occupied by residences in the United States to give the relative contributions of changing demographics versus increases in the land area used by individual households. Between 1976 and 1992 the amount of residential land in the United States grew 47.5% while population only grew 17.8%. At first glance, this suggest an important role for perhousehold increases. However, the calculations in this paper show that only 24.3% of the growth in residential land area can be attributed to Statelevel changes in land per household. 37.5% is due to overall population growth, 5.9% to the shift of population towards States with larger houses, 22.7% to an increase in the number of households over this period, and the remaining 9.5% to interactions between these changes. There are large differences across states and metropolitan areas in the relative importance of these components.
Download the paper (pdf). Published in Regional Science and Urban Economics.
Fat city: Exploring the relationship between urban sprawl and obesity
with Jean Eid, Diego Puga and Matt Turner
Abstract: We study the relationship between urban sprawl and obesity. Using data that tracks individuals over time, we find no evidence that urban sprawl causes obesity. We show that previous findings of a positive relationship most likely reflect a failure to properly control for the fact the individuals who are more likely to be obese choose to live in more sprawling neighborhoods. Our results indicate that current interest in changing the built environment to counter the rise in obesity is misguided.
Download the paper (pdf). Published in Journal of Urban Economics.
Exploring the Detailed Location Patterns of UK
Manufacturing Industries using Microgeographic
Data
with Gilles Duranton
Abstract: We use a point-pattern methodology to explore the detailed location patterns of UK manufacturing industries. In particular, we consider the location of entrants and exiters vs. continuing establishments, domestic- vs. foreign-owned, large vs. small, and affiliated vs. independent. We also examine co-localisation between vertically-linked industries. Our analysis provides a set of new stylised facts and confirmation for others.
Download the paper (pdf). Published in Journal of Regional Science.
Assessing the effects of local taxation using
microgeographic data
with Gilles Duranton and Laurent Gobillon
Abstract:We study the impact of local taxation on the location and growth of firms. Our empirical methodology pairs establishments across jurisdictional boundaries to estimate the impact of taxation. Our approach improves on existing work as it corrects for unobserved establishment heterogeneity, for unobserved time-varying site specific effects, and for the endogeneity of local taxation. Applied to data for English manufacturing establishments we find that local taxation has a negative impact on employment growth, but no effect on entry.
Download the paper (pdf) Forthcoming Economic Journal.
Geographical Information Systems (GIS) and Economics
Abstract:Geographical Information Systems (GIS) are used for inputting, storing, managing, analysing and mapping spatial data. This article consider the role each of these functions can play in economics. GIS can map economic data with a spatial component; generate additional spatial data as inputs to statistical analysis; calculate distances between features of interest and define neighbourhoods around objects. GIS also introduce economics to new data. For example, remote sensing provides large amounts of data on the earth's surface. This data is of inherent interest, but can also provide an exogenous source of variation and allow the construction of innovative instrumental variables.
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The determinants of urban sprawl: A portrait from space
with Marcy Burchfield, Diego Puga and Mattew A. Turner.
Quarterly Journal of Economics, 121(2), pp. 587-633.
Abstract:We study the extent to which US urban development is sprawling and consider what determines differences in sprawl across space. Using remote-sensing data to track the evolution of land use on a grid of 8.7 billion 30 x 30 metre cells, we measure sprawl as the amount of undeveloped land surrounding an average urban dwelling. On this measure, while the extent of sprawl remained roughly unchanged between 1976 and 1992, it varied dramatically across metropolitan areas. Ground water availability, temperate climate, rugged terrain, decentralized employment, early public transport infrastructure, uncertainty about metropolitan growth, and unincorporated land in the urban fringe all increase sprawl.
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Testing for Localisation Using Micro Geographic Data
with Gilles Duranton
The Review of Economic Studies, 72(4), pp. 1077-1106.
CEPR discussion paper 3379, CEP discussion paper No 540.
Abstract:To study the detailed location patterns of industries, and particularly the tendency for industries to cluster relative to overall manufacturing, we develop distance-based measures of localisation. We apply them to an exhaustive UK data set. In contrast to previous studies, our approach allows us to assess the statistical significance of departures from randomness. In addition, we treat space as continuous instead of using an arbitrary collection of geographical units. This avoids problems relating to scale and borders. For four-digit industries, we find that (i) only 51% of them are localised at a 5% confidence level, (ii) localisation takes place mostly at small scales below 50 kilometres, (iii) the degree of localisation is very skewed, and (iv) industries follow broad sectoral patterns with respect to localisation. Depending on the industry, smaller establishments can be the main drivers of both localisation and dispersion. Three-digit sectors show similar patterns of localisation at small scales as well as a tendency to localise at medium scales.
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Cities in the Developing World
with Anthony J. Venables
Abstract:Rapid urbanisation is a major feature of developing countries. Some 2 billion more people are likely to become city residents in the next 30 years, yet urbanisation has received little attention in the modern development economics literature. This paper reviews theoretical and empirical work on the determinants and effects of urbanisation. This suggests that there are substantial productivity benefits from cities, although unregulated outcomes may well lead to excessive primacy as externalities and coordination failures inhibit decentralisation of economic activity. Policy should operate both by identifying and addressing these market failures, and by seeking to remove institutional obstacles to decentralisation.
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Economic Linkages Across Space
with Patricia Rice and Anthony J. Venables
Abstract:We develop a diagrammatic framework that can be used to study the economic linkages between regions or cities. Hitherto, such linkages have not been the primary focus of either the theoretical or empirical literatures. We use the framework to analyse the impact of shocks that occur in one region (eg productivity improvements or increases in housing supply) on other regions, highlighting the key adjustment mechanisms and their long run implications for incomes, the cost of living, and the spatial distribution of population. Our general approach provides a framework encompassing both the New Economic Geography and Urban Systems literatures. We link our approach to these literatures and review empirical studies that quantify the key mechanisms that we have identified.
Download the current version (pdf). Published in Regional Studies.
Agglomeration and the adjustment of the spatial economy
with Pierre Philippe Combes and Gilles Duranton
Papers in Regional Science 84 (3), pp. 311-349
Abstract:We consider the literatures on urban systems and New Economic Geography to examine questions concerning agglomeration and how areas respond to shocks to the economic environment. We first propose a diagrammatic framework to compare the two approaches. We then use this framework to study a number of extensions and to consider several policy relevant issues.
Download the discussion paper version (pdf)
If you would like a copy of the published version (which includes some minor corrections to diagrams), please email h.g.overman@lse.ac.uk
The port geography of UK international trade
with L. Alan Winters
Environment and Planning A, 37, pp. 1751-1768.
Abstract:This paper examines how the geography of UK international trade has changed since the UK’s accession to the European Economic Community using a newly constructed data set that gives a detailed breakdown of the UK’s imports and exports by both port of entry and exit and commodity. Our results suggest that between 1970 and 1992 overall imports and exports re-orientated in favour of ports located nearer to the continent. The vast majority of individual commodities also saw a similar re-orientation.
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Trade shocks and industrial location: The Impact of EEC accession on the UK
with L. Alan Winters
Abstract:This paper combines establishment level production data with international trade data by port to examine the impact of accession to the EEC on the spatial distribution of UK manufacturing. We use this data to test the predictions from economic geography models of how external trade affects the spatial distribution of employment. Our results suggest that accession changed the country-composition of UK trade and via the port-composition induced an exogenous shock to the economic environment in different locations. In line with theory, we find that better access to export markets and intermediate goods increase employment while increased import competition decreases employment.
Download the paper (pdf). This version is a substantial revision of CEP discussion paper #588
Can we learn anything from Economic Geography proper?
Journal of Economic Geography, 4 (5), pp. 501-516.
Abstract:This paper considers the ways geographers (proper) and (geographical) economists approach the study of economic geography. It argues that there are two areas where the approach of the latter is more robust than the former. First, formal models both enforce internal consistency and allow one to move from micro to macro behaviour. Second, empirical work tends to be more rigorous, emphasising the importance of getting representative samples, testing whether findings are significant, identifying and testing empirical predictions from theory and dealing with issues of observational equivalence. But any approach can be improved and so the paper also identifies ways in which geographical economists could learn from the direction taken by economic geographers proper.
Download the paper from the Journal of Economic Geography
Monetary Union and the Economic Geography of Europe
with Karen Helene Midelfart and Tony Venables.
Journal of Common Market Studies, 41, pp. 847-868.
Abstract:Does the economic geography of Europe matter for the success of the Euro, and will the development of the Euro, in turn, shape the economic geography of Europe? This paper draws on theoretical reasoning and on evidence from previous integration to inform discussion of these issues. Empirical evidence points to the fact that monetary union is likely to lead to a substantial increase in trade volumes. Associated with this there will be a further increase in specialization in the EU as firms relocate to benefit from comparative and clustering. There are real economic benefits from these changes, while the associated increase in exposure to industry specific shocks is likely to be quite small. The most interesting issues surround the very long term development of the EU as a truly integrated economic space. Frequently observed regularities in the size distribution of cities suggest that there could be considerable adjustment pressures particularly on some of Europe's largest cities.
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The Spatial Distribution of Economic Activities in the European Union
with Pierre Philippe Combes.
Paper prepared for the Handbook of Urban and Regional Economics, Volume 4 edited by J. Vernon Henderson and Jacques Thisse.
Abstract:This paper considers the spatial distribution of economic activities in the European Union. It has three main aims. (i) To describe the data that is available in the EU and give some idea of the rich spatial data sets that are fast becoming available at the national level. (ii) To present descriptive evidence on the location of aggregate activity and particular industries and to consider how these location patterns are changing over time. (iii) To consider the nature of the agglomeration and dispersion forces that determine these patterns and to contrast them to forces acting elsewhere, in particular the US. Our survey suggests that much has been achieved in the wave of empirical work that has occurred in the past decade, but that much work remains to be done.
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Delocation and European Integration: Is Structural Spending Justified?
with Karen Helene Midelfart.
Economic Policy, 35, 321-359.
Abstract:How is European integration changing the location of industry? And what part are national and EU aids to industry playing in this process? We show that states and regions are becoming more specialised within the EU, but this process is very slow. While there is no evidence of polarisation occuring at the national level, some regions are losing out. National state aids to industry seem to have little effect for either good or ill, since their effectiveness in attracting economic activity and employment is limited. European Structural Funds expenditure, by contrast, does have an effect on the location of industry, notably by attracting industries that are intensive in research and development. However, this effect has mostly been acting counter to state's comparative advantage - R&D intensive industries have been encouraged by these aids to locate in countries and regions that have low endowments of skilled labour. Only in Ireland, where Structural Funds reinforced rather than offset comparative advantage, have poor regions been enabled systematically to catch up with the EU average.
Please email h.g.overman@lse.ac.uk if you would like a copy of this paper.
The Economic Geography of Trade, Production and Income: A Survey of Empirics
with Steve Redding and Tony Venables
Paper prepared for the Handbook of International Trade edited by J.Harrigan and K. Choi.
Abstract:This paper surveys the empirical literature on the economic geography of trade flows, factor prices, and the location of production. The discussion is structured around the empirical predictions of a canonical theoretical model. We review empirical evidence on the determinants of trade costs and the effects of these costs on trade flows. Geography is a major determinant of factor prices, and access to foreign markets alone is shown to explain some 35% of the cross-country variation in per capita income. The paper documents empirical findings of home market (or magnification) effects, suggesting that imperfectly competitive industries are drawn more than proportionately to locations with good market access. Sub-national evidence establishes the presence of industrial clustering, and we examine the roles played by product market linkages to customer and supplier firms, knowledge spillovers, and labour market externalities.
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The Location of European Industry
with Karen Helene Midelfart-Knarvik, Steve Redding and Tony Venables
Abstract: This report, produced for the European Commission DGII, analyses changes in European specialisation and agglomeration patterns over the last three decades. We find that specialisation has increased for nearly all European countries both relative to the average and in terms of bilateral comparisons with other member states. For most member states, increasing specialisation has been more or less continuous since joining the European Union. In contrast, individual industries show a variety of patterns - with some industries becoming more agglomerated and others becoming less. We develop an econometric approach to help explain these patterns. We find that both endowments and access to suppliers and markets are increasingly important in explaining the location of economic activity in the EU.
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Comparative advantage and economic geography: Estimating the determinants of industrial location in the EU.
with Karen Helene Midelfart-Knarvik, and Tony Venables
Abstract: We develop and econometrically estimate a model of the location of industries across countries. The model combines factor endowments and geographical considerations, and shows how industry and country characteristics interact to determine the location of production. We estimate the model on sectoral data for EU countries over the period 1980-97, and find that endowments of skilled and scientific labour are important determinants of industrial structure, as also are forward and backward linkages to industry.
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Spatial Evolution of the US Urban System
with Yannis Ioannides
Journal of Economic Geography, 4 (2), pp. 131-156.
Abstract: We test implications of economic geography models for location, size and growth of cities with US Census data for 1900 -- 1990. Our tests involve non-parametric estimations of stochastic kernels for the distributions of city sizes and growth rates, conditional on various measures of market potential and on features of neighbors. We show that while these relationships change during the twentieth century, by 1990 they stabilize such that the size distribution of cities conditional on a range of spatial variables are all roughly independent of these conditioning variables. In contrast, similar results suggest that there is a spatial element to the city wage distribution. Our parametric estimations for growth rates against market potential, entry of neighbors, and own lagged population imply a negative effect of market potential on growth rates, unless own lagged population is also included, in which case market potential has a positive effect and own lagged population a negative one. Cities grow faster when they are small relative to their market potential. In total, our results support some theoretical predictions, but also provide a number of interesting puzzles.
Download the paper from the Journal of Economic Geography
Zipfs Law for Cities: An Explanation
with Yannis Ioannides
Regional Science and Urban Economics, 33, pp. 127-137.
Abstract: We use data for metro areas in the United States, from the US Census for 1900 -- 1990, to test the validity of Zipf's Law for cities. Previous investigations are restricted to regressions of log size against log rank. In contrast, we use a nonparametric procedure to calculate local Zipf exponents from the mean and variance of city growth rates. This also allows us to test for the validity of Gibrat's Law for city growth processes. Despite variation in growth rates as a function of city size, Gibrat's Law does hold. In addition the local Zipf exponents are broadly consistent with Zipf's Law. Deviations from Zipf's Law are easily explained by deviations from Gibrat's Law.
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The Cross Sectional Evolution of the US City Size Distribution
with Yannis Ioannides
Journal of Urban Economics , 49, pp. 543-566
Abstract: We develop a series of non-parametric measures that allow us to characterise the nature of intra-distribution dynamics for the city size distribution. These measures have the major advantages that they do not require discretization of the city size distribution, nor do they obscure subtle changes within that distribution. We employ these measures to study the degree of mobility within the US city size distribution and, separately, within regional and urban subsystems. We find that different regions show different degrees of intra-distribution mobility. In addition, in contrast to received wisdom, second-tier cities show more mobility than top-tier cities.
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Unemployment Clusters Across European Countries and Regions
with Diego Puga
Economic Policy, 34, pp. 117-147.
CEPR Discussion Paper No 2255
Abstract: European regions have experienced a polarisation of their unemployment rates between 1986 and 1996, as regions with intermediate rates have moved towards either extreme. This process has been driven by changes in regional employment, only partly offset by labour force changes. Regions' outcomes have closely followed those of neighbouring regions. This is only weakly explained by regions being part of the same Member State, having a similar skill composition, or broad sectoral specialisation. Even more surprisingly, foreign neighbours matter as much as domestic neighbours. All of this suggests a reorganisation of economic activities with increasing disregard for national borders.
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Neighbourhood Effects in Small Neighbourhoods
Urban Studies, 39, pp. 117-130.
Abstract: This paper uses data on a sample of Australian teenagers to test for neighbourhood effects on school dropout rates. The data allows us to test for neighbourhood effects at two different spatial scales. We find that educational composition of the larger neighbourhood can influence the dropout rate. We argue that this is most likely to reflect the structure of local labour market demand. We also find that low socio--economic status of the immediate neighbourhood has an adverse impact on dropout rate. This suggests that government policy may need to consider the socio--economic composition of quite small geographical areas if it considers interfering in the market to create greater income mixing within neighbourhoods.
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The Influence of Neighbourhood effects on Education Decisions in a Nationally Funded Education System: the Case of Australia
with Alex Heath
CEP Working Paper No. 924, December 1997
Abstract: Empirical papers studying the effects of neighbourhood characteristics on socio-economic variables have predominantly used US data. We argue that the local nature of the US schooling system means that neighbourhood effects on education decisions may act through fiscal or social channels. We use data for a nationally funded public schooling system to identify neighbourhood effects in an environment where the level of school funding is independent of neighbourhood composition. We identify two different types of neighbourhood effects on school dropout. First, teenagers are more likely to dropout if the average dropout rate in the neighbourhood is high. Second, teenagers are more likely to dropout if they live in neighbourhoods with a high percentage of adults with vocational qualifications.
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