International Regional Science Review recent issues

Understanding Place and the Economics of Space: The Contributions of Roger Bolton

Sheppard, S. — Mon, 22 Jun 2009 03:28:10 PDT

Social Capital and Urban Growth

Glaeser, E. L., Redlick, C. — Mon, 22 Jun 2009 03:28:10 PDT

Social capital is often place-specific while schooling is portable, so the prospect of migration may reduce the returns to social capital and increase the returns to schooling. If social capital matters for urban success, it is possible that an area can get caught in a bad equilibrium where the prospect of out-migration reduces social capital investment and a lack of social capital investment makes out-migration more appealing. We present a simple model of that process and then test its implications. We find little evidence to suggest that social capital is correlated with either area growth or rates of out-migration. We do, however, find significant differences in the returns to human capital across space, and a significant pattern of skilled people disproportionately leaving declining areas. For people in declining areas, the prospect of out-migration may increase the returns to investment in human capital, but it does not seem to impact investment in social capital.

Why Some Rural Places Prosper and Others Do Not

Isserman, A. M., Feser, E., Warren, D. E. — Mon, 22 Jun 2009 03:28:10 PDT

More than 300 rural counties are more prosperous than the nation. Each has lower unemployment rates, lower poverty rates, lower school dropout rates, and better housing conditions than the nation. Prosperous counties tend to have more educated populations, more diverse economies, more private non-farm jobs, more farmers and government farm payments, more creative class occupations, and more equal income distributions. They have fewer African-American, American Indian, or Hispanic residents and fewer recent immigrants. Some findings support what many rural people believe to be true: civically engaged religious groups and other identities that bind people together can really matter. Other results contradict conventional wisdom. For instance, climate and distances to cities and major airports, are relatively unimportant. Focusing on prosperity, instead of growth or competitiveness, provides new insights into rural conditions and prospects.

Policies for Mixed Communities: Faith-Based Displacement Activity?

Cheshire, P. — Mon, 22 Jun 2009 03:28:10 PDT

The belief that it is fairer if communities are ``mixed'' can be traced at least to the late nineteenth century and the founders of the Garden City Movement. The idea is now firmly established in Organization for Economic Cooperation and Development (OECD) and national policies. This article reviews the evidence and argues that this is essentially a faith-based policy because there is scant real evidence that making communities more mixed makes the life chances of the poor any better. There is overwhelming evidence that the attributes that make neighborhoods attractive are capitalized into house prices/rents. The result is that poor people cannot afford to buy into nicer neighborhoods, which anyway have amenities of no value to them. Moreover, ``specialized neighborhoods'' are an important element in agglomeration economies and seem to be welfare enhancing. Thus, policies for mixed neighborhoods treat the symptoms rather than the causes of poverty. Efforts to improve social equity would be more effectively directed toward people themselves rather than moving people around to mix neighborhoods.

A Meta-Analysis of Cost of Community Service Studies

Kotchen, M. J., Schulte, S. L. — Mon, 22 Jun 2009 03:28:10 PDT

Understanding Spatial Variation in Tax Sheltering: The Role of Demographics, Ideology, and Taxes

Gentry, W. M., Kahn, M. E. — Mon, 22 Jun 2009 03:28:10 PDT

Taxpayers shelter income from taxation both through illegal evasion and legal avoidance. This tax sheltering creates a difference between a household's actual income and what it reports to the tax authorities. While tax sheltering is a central concern for designing a tax system, the private nature of this behavior complicates evaluating the magnitude and determinants of such behavior. In this article, we combine zip-code level data on reported income from the Internal Revenue Service and the Census Bureau to examine three types of determinants of tax sheltering: (1) tax policy variables, including tax rates (2) political attitudes toward taxation; and (3) demographics. Our estimates suggest that higher tax rates increase the amount of tax sheltering. In terms of political support, our results suggest that places with voters who are either more conservative or less supportive of tax increases actually shelter less income.

Regional Business Cycles in Japan

Hayashida, M., Hewings, G. J. D. — Tue, 24 Mar 2009 11:41:46 PDT

In previous studies of regional business cycles in Japan, critical differences in the amplitudes and the turning points in business cycles by region were revealed. However, there is a problem in the previous studies; they relied on one series, typically an index of industrial production in manufacturing sectors, hence, it is necessary to include information on sectors other than manufacturing to provide a more complete measure of the business conditions of a region. Specifically, we extract a regional business index from four business indicators using the principal components and applied the regime switching model to identify the turning points in regional business cycles. Our result shows that the sector that generates the greatest influence on the business cycles differs by region. Furthermore, different regions have different features also from the viewpoint of the turning points of business cycles.

Estimating Spatial Autoregressive Models by GME-GCE Techniques

Fernandez-Vazquez, E., Mayor-Fernandez, M., Rodriguez-Valez, J. — Tue, 24 Mar 2009 11:41:46 PDT

The traditional approach to estimate spatial models bases on a preconceived spatial weights matrix to measure spatial interaction among locations. The a priori assumptions used to define this matrix are supposed to be in line with the ``true'' spatial relationships among the locations of the dataset. Another possibility consists of using some information present on the sample data to specify an empirical matrix of spatial weights. In this article we propose to estimate spatial autoregressive models by generalized maximum entropy (GME) and generalized cross entropy (GCE) econometrics. We compare some traditional methodologies with the proposed GME-GCE estimator by means of Monte Carlo simulations in several scenarios. The results show that the entropy-based estimation techniques can outperform traditional approaches under some circumstances. An empirical case is also studied to illustrate the implementation of the proposed techniques for a real-world example.

Human Capital Assets and Structures of Work in the US Metropolitan Hierarchy (An Analysis Based on the O*NET Information System)

Scott, A. J., Mantegna, A. — Tue, 24 Mar 2009 11:41:46 PDT

The O*NET database provides a wealth of information on the qualitative aspects of different occupations. On the basis of these data, we carry out an investigation of the forms of human capital and work that can be found at different levels in the urban hierarchy of the United States. The study proceeds, first, by means of factor analysis of the original O*NET data, second, by constructing a derivative set of indexes of human capital and work activities for metropolitan areas, and third, by subjecting these indexes to multiple regression analysis. The results indicate that human capital and work activities in US metropolitan areas vary systematically across the urban hierarchy, as revealed by the relative concentration of occupations that rely heavily on cognitive and behavioral resources at the top end of the hierarchy and a relative concentration of occupations that rely on physical work at the bottom. However, there are some important exceptions to this general pattern.

Prediction Using Panel Data Regression with Spatial Random Effects

Fingleton, B. — Tue, 24 Mar 2009 11:41:46 PDT

This article considers some of the issues and difficulties relating to the use of spatial panel data regression in prediction, illustrated by the effects of mass immigration on wages and income levels in local authority areas of Great Britain. Motivated by contemporary urban economics theory, and using recent advances in spatial econometrics, the panel regression has wages dependent on employment density and the efficiency of the labor force. There are two types of spatial interaction, a spatial lag of wages and an autoregressive process for error components. The estimates suggest that increased employment densities will increase wage levels, but wages may fall if migrants are underqualified. This uncertainty highlights the fact that ex ante forecasting should be used with great caution as a basis for policy decisions.

Income Inequality and Economic Convergence in Turkey: A Spatial Effect Analysis

Yildirim, J., Ocal, N., Ozyildirim, S. — Tue, 24 Mar 2009 11:41:46 PDT

Even though the convergence of regional per capita income has been a highly debated issue internationally, empirical evidence regarding Turkey is limited as well as contradictory. This article is an attempt to investigate regional income inequality and the convergence dynamics in Turkey for the time period 1987—2001. First, the Theil coefficient of concentration index is used to analyze the dispersion aspects of the convergence process. The geographically based decomposition of inequality suggests a strong correlation between the share of interregional inequality and spatial clustering. Then, we estimate convergence dynamics employing alternative spatial econometric methods. In addition to the global models, we also estimate local models taking spatial variations into account. Empirical analysis indicates that geographically weighted regression improves model fitting with better explanatory power. There is considerable variation in speed of convergence of provinces, which cannot be captured by the traditional beta convergence analysis.

Deviance Residual Moran's I Test and Its Application to Spatial Clusters of Small Manufacturing Firms in Japan

Banasick, S., Ge Lin, , Hanham, R. — Thu, 18 Dec 2008 10:43:56 PST

It is proposed that when data exhibit local clusters, a logit local association model coupled with deviance residual Moran's I can be an alternative to the global Poisson autoregressive model because the former can explicitly reveal local clusters and remove residual clustering. Because small firms in Japan traditionally exhibit local clusters, they are a good illustration. In this article, the authors introduce the deviance residual Moran's I to capture local cluster tendencies in a set of logit models and then evaluate their performance by simulation and case study. Results show that I_DR can effectively serve as a global measure of a clustering tendency for logit models and can complement other autoregressive logistic regressions for local cluster modeling when a significant I_DR is contributed by local clusters. In addition, ecological covariates identified in the previous literature were sufficient to account for the spatial clustering of small firms in 1990 but not in 2000.

Typology of American Poverty

Peters, D. J. — Thu, 18 Dec 2008 10:43:56 PST

This analysis seeks to better understand the geography of American poverty over time. Cluster analysis is used to group 34,908 minor civil divisions according to their similarity in mean-centered poverty rates from 1980 to 2000. Logistic regression is used to asses the groupings' statistical validity and accuracy. Results identify twelve statistically distinct groupings and that over three thousand subcounty places had poverty rates of nearly 20 percent above the national average going back to 1980. However, less than 50 percent of these fall within the U.S. Department of Agriculture's Persistent Poverty Counties. The new typology shows the diversity of poverty in terms and identifies places based on poverty's relative severity. The typology also uniquely identifies places that moved into and out of high poverty and identifies many poor places that are ``statistically invisible'' using existing typologies. Results show that correlates of poverty identified in the literature generally hold true across smaller geographic scales.

Construction of Regional Input-Output Tables Using Nonsurvey Methods: The Role of Cross-Hauling

Kronenberg, T. — Thu, 18 Dec 2008 10:43:56 PST

Regional input-output tables are usually not constructed from survey data but are estimated using nonsurvey regionalization methods, which saves time and money. However, traditional regionalization methods ignore cross-hauling (the simultaneous exporting and importing of one and the same type of product). This flaw results in an underestimation of trade and an overestimation of regional output multipliers. This article presents a new approach based on an estimate of product heterogeneity, which addresses the problem of cross-hauling and is applicable to European System of Accounts tables with indirectly allocated imports. Its application is illustrated by the estimation of a regional input-output table for North Rhine—Westphalia, one of Germany's federal states. The results are compared to the traditional commodity balance approach, indicating that the new method suffers far less from the underestimation of trade and the overestimation of multipliers.

Assessing the Effectiveness of Human Capital Investments on the Regional Unemployment Rate in the United States: 1990 and 2000

Nistor, A. — Thu, 18 Dec 2008 10:43:56 PST

This article evaluates the effect of human capital investment—for example, expenditures on education, training, and employment—on regional unemployment rates in the United States. State-level unemployment rates are estimated using the spatial lag fixed effects model with spatial correlation of regional unemployment rates for 1990 and 2000. The results show that unemployment rates can be decreased by a policy of state-level human capital investment. A $100 per capita human capital investment in a state is expected to decrease the unemployment rate by 0.63 percent. Human capital investment has a negative impact on a state's unemployment as long as the yearly average state net migration rate is greater than –1.6 percent. A maximum of 1.6 percent of a state's population can out-migrate on average in a year for human capital expenditures to be associated with a decrease in the state's unemployment rate. If a state's net migration rate is less than –1.6 percent of its population, human capital expenditures have a positive effect on unemployment.

Productivity Polarization across Regions in Europe: The Role of Nonlinearities and Spatial Dependence

Basile, R. — Thu, 18 Dec 2008 10:43:56 PST

The regional distribution of labor productivity in Western Europe is characterized by a core-periphery spatial pattern: high (low)-productivity regions are in a proximate relationship with other high (low)-productivity regions. Over the period 1980—2003, intradistribution dynamics has generated long-run multiple equilibria with the formation of two clubs of convergence. The observed dynamics can be only marginally explained by nonlinear (threshold) effects in the accumulation of physical capital. In contrast, the joint effect of spatial dependence and nonlinearities in growth behavior plays a key role in determining multiple equilibria and reinforcing polarization of labor productivity.

The Determinants of Regional Manufactured Exports from a Developing Country

Matthee, M., Naude, W. — Mon, 08 Sep 2008 13:13:29 PDT

In this article, the question of the location of exporters of manufactured goods within a country is investigated. Data from 354 magisterial districts in South Africa are used with a variety of estimators to identify the determinants of regional manufactured exports. It is found that the home-market effect (measured by the size of local gross domestic product) and distance (measured as the distance in km to the nearest port) are significant determinants of regional manufactured exports. This article contributes to the literature by using developing country data and by adding to the small literature on this topic. This article complements recent work on the determinants of exports from European regions and finds that distance is relatively more important in the developing country context than in the European case.

Disproportionality Measures of Concentration, Specialization, and Localization

Bickenbach, F., Bode, E. — Mon, 08 Sep 2008 13:13:29 PDT

This article extends the methodological toolbox of measures of regional concentration of industries and industrial specialization of regions. It first defines disproportionality measures of concentration and specialization and proposes a taxonomy of these measures. This taxonomy is based on three characteristic features of any disproportionality measure. It helps researchers define the measure that fits their research purpose and data best. The article then generalizes this taxonomy to cover disproportionality measures of economic localization that evaluate specialization and concentration simultaneously and spatial disproportionality measures that deal with the checkerboard problem and the modifiable areal unit problem.

The Impact of Innovation on a Polluting Firm's Regulation Driven Decision to Upgrade Its Capital Stock

Batabyal, A. A., Nijkamp, P. — Mon, 08 Sep 2008 13:13:29 PDT

The extant literature has paid scant theoretical attention to the tripartite interaction among increasing environmental regulations, the resulting decision by a polluting firm to upgrade its capital stock, and the impact of innovation on this decision. Hence, the authors theoretically analyze this tripartite interaction when a polluting firm faces adjustment costs to upgrade its capital stock. First, they construct a dynamic model of regulation driven investment by a polluting firm. Second, they specify the conditions characterizing efficient investment. Third, they study the impact of an unanticipated increase in innovation on the polluting firm's steady-state capital stock. Fourth, they analyze the impact of an anticipated increase in innovation on the polluting firm's steady-state capital stock. Finally, the authors discuss the relationship between the polluting firm's internal shadow price of capital and the stock market value of a unit of this firm's capital.

How Much Does Country Matter?: The Estimation of Variance in High-tech Industry Performance

Chen, Y.-M. — Mon, 08 Sep 2008 13:13:29 PDT

Industrial organization economics and resource-based views of the firm have disagreed over what matters most to profitability for more than 60 years. Until recent variance decomposition studies started trying to determine the relative importance of industry, corporate parent, and business segment on profitability, little research had been done to investigate the extent to which difference in countries could explain the variation in industry performance. This study explores variation in high-tech industry performance, with particular interest in the relative effects of country versus industry for four country classes and eight geographic regions. A variance components model revealed that while country dominated high-tech industry performance in the developed countries and geographic regions North America, South America, All America, Western Europe, and All Europe, industry factors played a role in the development of high-tech industries worldwide. We also found that the effects of industry contributed substantially to the performance of high-tech industry when there was sustainable investment and innovation, especially in newly industrializing economies, large less-developed countries, and Southeast Asia.