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This paper studies an intermediated market for a homogeneous good with middlemen who hold inventories of the good. Using a directed search approach, I investigate a steady state equilibrium. Under market frictions and competition, the ask price of middlemen includes a retail premium for the immediacy service to buyers and the bid price includes a wholesale premium charged to sellers for guaranteed sale. It is shown that the middlemen enhance the economy-wide eciency, and that the bid-ask spread can be non-monotone in the middlemen’s inventory capacity. The simple model provided here has wide applicability and oers economic insights into many empirically relevant forms of middlemen, especially in the context of financial intermediaries, international trade and retail stores.

Using data on academic citations, career and educational histories of mathematicians, and disaggregated distance data for the world’s top 1000 math departments, we study how geography and ties aect knowledge ows among scholars. The ties we consider are coauthorship, past colocation, advisor-mediated relationships, and alma mater relationships (holding a Ph.D. from the institution where another scholar is aliated). Logit regressions using xed eects that control for subject similarity, article quality, and temporal lags, show linkages are strongly associated with citation. Controlling for ties generally halves the negative impact of geographic barriers on citations. Ties matter more for less prominent and more recent papers and show no decline in importance in recent years. The impact of distance (controlling for ties) has fallen and is statistically insignicant after 2004.

Becker (1968) and Stigler (1970) provide the germinal works for an economic analysis of crime, and their approach has been utilised to consider the response of crime rates to a range of economic, criminal and socioeconomic factors. Until recently however this did not extend to a consideration of the role of personal indebtedness in explaining the observed pattern of crime. This paper uses the Becker (1968) and Stigler (1970) framework, and extends to a fuller consideration of the relationship between economic hardship and theft crimes in an urban setting. The increase in personal debt in the past decade has been significant, which combined with the recent global recession, has led to a spike in personal insolvencies. In the context of the recent recession it is important to understand how increases in personal indebtedness may spillover into increases in social problems like crime. This paper uses data available at the neighbourhood level for London, UK on county court judgments (CCJ’s) granted against residents in that neighbourhood, this is our measure of personal indebtedness, and examines the relationship between a range of community characteristics (economic, socio-economic, etc), including the number of CCJ’s granted against residents, and the observed pattern of theft crimes for three successive years using spatial econometric methods. Our results confirm that theft crimes in London follow a spatial process, that personal indebtedness is positively associated with theft crimes in London, and that the covariates we have chosen are important in explaining the spatial variation in theft crimes. We identify a number of interesting results, for instance that there is variation in the impact of covariates across crime types, and that the covariates which are important in explaining the pattern of each crime type are largely stable across the three periods considered in this analysis.

Does trade within a country affect welfare and productivity? What are the magnitude and consequences of costs to such trade? To answer these questions, we exploit unique Canadian data to measure internal trade costs in a variety of ways – they are large, and vary across sectors and provinces. To quantify their consequences for welfare and productivity, we use a recent multi-sector trade model featuring rich input-output relationships. We find internal trade raises aggregate welfare by 4.4% relative to a counterfactual of only international trade. As for internal trade costs, lowering them by 10% yields aggregate gains of 0.9%; eliminating our preferred estimates of costs, gains average between 3-7% – equivalent to real GDP gains between $50-$130 billion. Finally, as policy reforms to improve internal trade are often sector-specific, we liberalize sectors one at a time and find gains are largest in highly interconnected industries.

A tribal economy is always characterized by the collection of their social, institutional, technological and finally economic arrangements through which the community seeks to enhance their material and social well-being. They have little knowledge and little power to influence the direction of change taking place due to broader changes in society due to impact of development of science and technology in every field. All economic and social development activities are planned for the welfare of its people and this is truly reflected in their levels of living which is the end product of all economic efforts. In recent times, the rich are very rich and poor are very poor. The middle class people are almost absent. There is rampant social corruption with no social audit. That is, income inequality is very rampant. Therefore, there is a vast scope for research to examine the economic inequality between these two groups in the level of their living in intra and inter region. So far the development consists of a series of poverty alleviation programmes, designed to widen the income earning opportunities for the poor to enhance their socio-economic status. Several rural development and poverty Alleviation Programmes have been implemented by Governments. But such programmes have not yielded the desired result. The objective of the study is to  search the income inequalities among the rural tribal people by taking the concept that (1) poverty and inequality do not change at the same pace and they may even change in the same directions and (2) there are differences in the levels of living of people between regions, villages and even within a village due to inequality of income earned by the household or unequal distribution of wealth.

This article introduces our project on the relationship between railways and real income levels across European regions between 1870 and 1910. While similar relationships have been analysed for the USA, India and individual European countries, our project is the first to take a pan-European regional perspective. We discuss the reasons for the neglect to date, highlighting the need to drill deeper into the changing directional effects of railways on income, the importance or necessity of using regional-level data and the amount of research that still needs to be done. To this end, we present preliminary insights from our novel database on European regional per capita income and railway mileage, after discussing our data sources in depth. We also outline our research agenda, showing our intended conceptual and analytical approach for future work. The Spanish Ministry of Education (CS02010-16389), the UK Economic and Social Research Council (ES/I011161/1) and the EU Social Fund and Maltese Ministry of Education (STEPS) provided funding for this research.

Productivity is high in cities partly because the urban environment acts as a self-selection mechanism. If workers have imperfect information about the quality of workers with whom they match and matches take place within cities, then high-ability workers will choose to live and work in expensive cities. This self-selection improves the quality of matches in such cities. The mechanism may be reinforced by the development of informational networks in cities with a large proportion of high ability workers. As a consequence productivity in these cities is high for workers of all ability types.(This abstract was borrowed from another version of this item.)

We consider the impact of MERCOSUR on trade among Brazilian states and on trade by Brazilian states with MERCOSUR and the rest of the world. We use a theoretically founded gravity model to shed light on MERCOSUR’s possible creation and diversion effects as well as its “preference erosion” effect on trade among Brazilian states. Using data on interstate trade over a four-year period, including one year prior to the MERCOSUR period (1991), we deliver empirical evidence at state level with a focus on the impact of MERCOSUR which can vary across Brazilian regions. We show that MERCOSUR increased Brazilian states’ trade with member countries, but had no effect on either interstate trade or Brazilian states’ trade with third countries. The paper finds that MERCOSUR’s impact varies across Brazilian regions and that the Northern region is relatively less well integrated into international trade. We use an estimation method dealing better with the traditional issue of zero trade values and heteroskedasticity than OLS does. _________________________________ Le document décompose l'impact du MERCOSUR sur le commerce brésilien en distinguant les effets de l’accord sur les échanges entre les États brésiliens et de chaque État brésilien avec le MERCOSUR et le reste du monde. Nous utilisons un modèle de gravité théoriquement fondé pour mettre en évidence non seulement les éventuels effets de création et de détournement de commerce mais également un effet d’"érosion des préférences" quand on considère le Brésil comme un bloc commercial qui regrouperait les États. En utilisant les données sur le commerce interétatique sur une période de quatre ans, dont un an avant la période du MERCOSUR (1991), nous aboutissons à des résultats empiriques au niveau des 27 États brésiliens sur les impacts du MERCOSUR sur le commerce qui peuvent varier selon les régions du Brésil. Nous montrons que le MERCOSUR a permis d’augmenter le commerce des États avec les pays membres, sans effets importants sur le commerce interétatique ou avec les pays tiers. Nous confirmons que l'impact du MERCOSUR varie selon les régions du Brésil et que la région du Nord est relativement moins bien intégrée dans le commerce international. Nous utilisons une méthode d'estimation qui résout certains des problèmes des modèles de gravité comme les valeurs de commerce nulles et l’hétéroscédasticité trouvée en MCO.

We examine the welfare effects of provision of local public goods in an empirically relevant setting using a multi-community model with mobile and heterogeneous households and with flexible housing supplies. We characterize the first-best allocation and show efficiency can be implemented with decentralization using head taxes. We calibrate the model and compare welfare in property-tax equilibria, both decentralized and centralized, to the efficient allocation. Inefficiencies with decentralization and property taxation are large, dissipating most if not all the potential welfare gains that efficient decentralization could achieve. In property-tax equilibrium, centralization is frequently more efficient! An externality in community choice underlies the failure to achieve efficiency with decentralization and property taxes: poorer households crowd richer communities and free ride by consuming relatively little housing thereby avoiding taxes. Copyright , Oxford University Press.

Because disciplines and their cores and boundaries are subject to change, a periodic introspective assessment can be useful in evaluating the relevance of a changing discipline to the equally dynamic and pressing needs of society. Similar examinations of other disciplines, notably economics, have been conducted in part as a means of minimizing the risks of declining credibility, policy relevance, and societal benefit. With the Southern Regional Science Association celebrating recently its 50th meeting, and as regional science itself approaches its 60th year, this paper provides a reexamination of the core of regional science. We consider the theoretical and methodological underpinnings and current status, the various roles played by space in various representations, and the values that guide our policy advice and recommendations. While cores and boundaries of regional science cannot be unambiguously identified, particularly due to the considerable overlap with and lineage to other disciplines, we conclude that it is precisely the interdisciplinarity of regional science that distinguishes it from other social sciences, and ensures its continued relevance.

What factors influence state economic growth? This article uses annual state (and local) data for the years 1947 through 1997 for the forty-eight contiguous states to estimate the effects of a large number of factors, including taxation and expenditure policies, on state economic growth. A special feature of the empirical work is the use of orthogonal distance regression (ODR) to deal with the likely presence of measurement error in many of the variables. The results indicate that the correlation between state (and state and local) taxation policies is often statistically significant but also quite sensitive to the specific regressor set and time period; in contrast, the effects of expenditure policies are much more consistent. Of some interest, there is moderately strong evidence that a state’s political orientation has consistent and measurable effects on economic growth; perhaps, surprisingly, a more ‘‘conservative’’ political orientation is associated with lower rates of economic growth. Finally, correction for measurement error is essential in estimating the growth impacts of policies. Indeed, when measurement error is considered via ODR estimation, the estimation results do not support conditional convergence in state per capita income.

Since May 2009 the first National Health Accounts (NHA) for Pakistan have been finalised and published by Federal Bureau of Statistics (FBS) in cooperation with German Technical Cooperation (GTZ). This paper goes one step ahead the report and analyses in more detail the regional differences in health expenditure structures in Pakistan. The further analyses can be divided into four parts: health expenditures in provinces (Provincial Health Accounts, PHA),2 Punjab provincial and district governments health expenditures and its comparison with ADB figures, all districts of Pakistan and comparison between total district government and provincial government expenditure for each province; the latter calculation is applied as indication for the degree of fiscal autonomy of the districts in each province. Consequently we first analyse the provincial health expenditures by Financial Agents and compare them between the provinces which leads to very heterogeneous results (Section 2); the per capita health expenditures differ from 16 to 23 USD. Secondly, we compare NHA results on Punjab district government with available ADB results and present differences in methods as possible reasons for different results (Section 3). Third, we analyse district data of all district governments in all four Pakistani provinces on the level of detailed function codes in Section 4; the aim is to discover regional differences between districts of the same as well as of different provinces. Fourth, we analyse in Section 5 the degree of fiscal autonomy on health of the districts in each province; therefore we review the ordinance description and compare total district government with total provincial government expenditures per province. Finally we give recommendations for future rounds of NHA in Pakistan regarding formats and necessities of detailed health expenditure data collection to ensure evidence based decision-making not only on federal, but also on provincial and district level. JEL classification: H51, I1, O18, R1 Keywords: National Health Accounts, Health Expenditures, Regional Comparison, Regional Accounts, Fiscal Autonomy, Pakistan

The authors detail an urban economics experiment that is easily run in the classroom. The experiment has a flexible design that allows the instructor to explore how congestion, zoning, public transportation, and taxation levels determine the bid–rent function. Heterogeneous agents in the experiment compete for land use using a simple auction mechanism. Using the data that is collected, a bid–rent function is derived, and the experimental treatment is altered over the course of three sessions to uncover core concepts in urban economics. Moreover, this provides a tangible experience that can be used to help undergraduates relate to urban issues such as the steep rent gradient found around many larger colleges and universities.

Space has always been more or less present in economic theories. Nevertheless, traditional approaches, as well as the so-called new economic geog- raphy, introduce space subsequently. Economic theories are first built independently of spatial and temporal contexts, for example, through costs varying according to distance. The innovative milieus approach is based on the ideas that space—or, more precisely, territory—is the matrix of economic development and that economic mech- anisms transform space. This article describes innovative milieus as an ideal type that articulates three paradigms: the technological paradigm, which stresses inno- vation, learning, and know-how as the most important competitive advantages; the organizational paradigm, which emphasizes the role of networks, competition, and rules of cooperation, as well as relational capital; and the territorial paradigm, which accounts for the role of proximity and distance and stresses the idea that competi- tion occurs between regions. The originality of the innovative milieus approach is that it considers these three paradigms as a whole, thus providing a stabilized set of concepts that allow for an understanding of economic development processes in their space and time contexts.

An overview of the process of urbanization in the State of Arunachal Pradesh during the last two decades brings out the inadequacy of the existing institutional structure in managing urban centers in the “borderless” world of today. These institutions are noted to have least capacity to deal with the demands and pressures that are being generated as a result of the present focus of globalization. Managing these processes was considered to be an exclusive responsibility of the government and state owned and state led institutions, just a few decades back. Now, under a decentralized system of planning, it is viewed as a joint responsibility of stakeholders like industrial and business enterprises, public and private organizations and resident associations, etc. These tasks include providing the infrastructural services and other civic amenities etc. for the urban dwellers. Cities and towns are a product of complex forces that include market dynamics, over which town and city managers have only a limited control. Consequently the extent to which an individual city or town can accelerate or retard its economic, social, or for that matter, demographic growth, depend largely on internal dynamics and external factors boosting the dynamics.The new perspective, thus, urges the government at different levels in the hierarchy to function in collaboration with the other stakeholders, if they want to make an impact on the pace, pattern and trend of urbanization.

India is adding 40 million people to its middle class every year. Growing at the current rate, a majority of Indians will be belonging to the middle-class by 2025. Apart from this burgeoning middle class in the country, the economy growth seemed to have touched the lives of the poor also. According to the national Sample Survey results, people living below poverty line have dramatically come down during the post economic reform era. People living below poverty line (BPL) came down from 36 per cent in 1993-94 (50th Round, NSSO) to 26 per cent in 1999-2000 (55th Round, NSSO). Many economists question this dramatic change in poverty level. However, the intention of this paper is not to join the debate on the level of poverty reduction in the county but to recognize the reduction of poverty in the country during the post-economic reform era and to suggest steps, which can be taken to make globalization pro-poorer.   Classification-JEL: Keywords:

This research has been motivated by the fact that inter-city variation in prices and hence cost of living has implications for many aspects of development and public policy. This is true for all countries and especially for developing countries like Pakistan where one would expect differences in cost of living to be more pronounced (ceterus paribus) due to a relatively underdeveloped transport network and a lack of development of a national common market. A better understanding of the inter-city variation in prices indicates the extent to which markets within countries are integrated. A monitoring of the inter-city price index over time indicates whether the economy as a whole has become more or less integrated over time i.e. has there has been convergence or divergence within the local economy (which has also been one of the objectives of this research). Secondly, a quantification of inter-city variation in cost of living is essential to understand differentials in real incomes across the country. Such an understanding will yield fairer minimum wage legislation by the government and also wage remuneration packages by employers in both the public and private sectors operating in multiple cities thus leading to better equalisation of real wages across locations. As noted by Haworth and Rasmussen (1973) the pursuit of a uniform wage policy by the U.S. Post Office in the 1970s led to greater wage dissatisfaction among workers and labor strikes in areas where cost of living was relatively higher. Thirdly, allowing for cost of living differentials among cities will lead to better estimates of urban inequality and incidence of poverty. In this context it is particularly important to see if differences in cost of living mitigate or accentuate the difference in the magnitude of poverty between richer and poor jurisdictions. The estimation of cost of living differentials will also lead to much greater understanding of migration patterns within countries and the functioning of regional and interregional markets across the country which are directly related to cost of living, and real wages/incomes. For example, if the same minimum wage legislation is applicable to the whole country, it will lead to migration to those cities where cost of living is relative low and hence the real value of the minimum wages is high (ceterus paribus). This illustrates the important implications that uniform minimum wage legislation and welfare packages across the country have for migration patterns when cost of living differentials are significant.

Geographical concentration of stores that sell similar commodities is pervasive. To analyze this phenomenon, this paper provides a simple two dimensional spatial competition model with consumer taste uncertainty. Given taste uncertainty, concentration of stores attracts more consumers since more variety means that a consumer has a higher chance of finding her favorite commodity (a market size effect). On the other hand, concentration of stores leads to fiercer price competition (a price cutting effect). The trade-off between these two effects is the focus of this paper. We provide a few sufficient conditions for the nonemptiness of equilibrium store location choices in pure strategies. We illustrate, by an example, that the market size effect is much stronger for small scale concentrations, but as the number of stores at the same location becomes larger, the price cutting effect eventually dominates. We also discuss consumers' incentives to visit a concentration of stores instead of using mail orders.

This paper analyzes the effect of resource-based economic specialization on women's labor market outcomes. Using information on the location and discovery of major oil fields in the Southern United States coupled with a county-level panel derived from US Census data for 1900-1940, we specifically test the hypothesis that the presence of mineral resources can induce changes in the sectoral composition of the local economy that are detrimental to women's labor market outcomes. We find evidence that the discovery of oil at the county level may constitute a substantial male biased demand shock to local labor markets, as it is associated with a higher gender pay gap. However, we find no evidence that oil wealth lowers female labor force participation or has any impact on local marriage and fertility patterns. While our results are consistent with oil shocks limiting female labor market opportunities in some sectors (mainly manufacturing), this effect tends to be compensated by the higher availability of service sector jobs for women who are therefore not driven out of the labor market.

The standard index of urban quality of life provides an approximated value of the quality of life, since it associates the bundles of amenities observed in urban areas with their implicit marginal prices, and not with the prices of infra-marginal units. In this paper, we adjust the standard measure to determine the monetary value of any bundle, which might substantially differ from the bundle of the marginal quantities of amenities. Our methodology relies on a welfare measure that represents the individual willingness to give up (accept) to insure (forego) a change in the current distribution of amenities across areas will take place, keeping the level of utility unchanged. We obtain a new measure, the value-adjusted quality of life index, that can be identified from parametric models of consumer preferences. We use this index to measure the quality of life in the city of Milan.

This paper analyses regional resilience and local economic growth patterns in Italy over the past four decades. Place-specific transient and permanent effects of aggregate employment shocks are studied. Geographical asymmetries in engineering and ecological resilience are found, providing auxiliary insights on the rooted Italian regional inequalities. The territorial impact of different crises is investigated and a direct comparison with the UK case is offered. The importance of manufacturing activities for explaining economic resilience is assessed, finding out a positive relation between the resilience of the industrial sector and the overall local economic development. Some policy implications are discussed in the conclusion.

Most countries exhibit large and persistent geographical differences in wages, income, and unemployment rates. A growing class of place-based policies attempts to address these differences through public investments and subsidies that target disadvantaged neighborhoods, cities, or regions. Place-based policies have the potential to profoundly affect the location of economic activity, along with the wages, employment, and industry mix of communities. These programs are widespread in the United States and throughout the world but have only recently been studied closely by economists. We consider the following questions: Who benefits from place-based interventions? Do the national benefits outweigh the costs? What sorts of interventions are most likely to be effective? To study these questions, we develop a simple spatial equilibrium model designed to characterize the welfare effects of place-based policies on the local and the national economy. Using this model, we critically evaluate the economic rationales for place-based policies and assess the latest evidence on their effects. We conclude with some lessons for policy and directions for future research.

SummaryWe consider an economy in which a central government has to decide on the provision and location of an emergency public service the quality of which diminishes with distance. The emergency service has to attend a group of municipalities geographically located in a star-tree-graph. We derive the optimal location and provision, as well as the Lindahl prices for the emergency service. Also, we determine the minimum quality of service that makes efficient the existence of a unique provider for the whole economy. Conversely, given any level of quality of service we identify the stable and efficient structure of provision.

The relative populations of the top 40 urban areas of France and Japan remained very constant during these countries' periods of industrialization and urbanization, and are described quite well by the ‘rank-size rule.’ Moreover, projection of their future distributions based on past growth indicates that their size-distributions in steady state will not differ essentially from what they have been historically. Urbanization consequently appears to have taken the form of the parallel growth of cities, rather than convergence to an optimal city size or the divergent growth of the largest cities. We develop a model of urbanization and growth based on the accumulation of human capital consistent with these observations. Our model predicts that larger cities will have higher levels of human capital, higher rents and higher wages per worker, even though workers are homogeneous and free to migrate between cities. Cities grow at a common growth rate, with relative city size depending upon the environment that they provide for learning.

Cultural re-imaging through iconic art museums aims to create symbolic capital for a place in the form of creative images, reputation and associations with innovation. While literature has long identified architectural uniqueness as a potential driver of brand competitiveness, we argue diffusion of that image is equally important. This work draws upon economic concepts from other cultural industries (such as film, music and art) to develop a framework for understanding how cultural brands are built: How reproducible images of singular architecture accumulate in the media to strengthen a brand. We then test an art brand’s impact on visitors. This work aims to offer evidence that the Guggenheim Museum Bilbao brand generates tourism to the city of Bilbao. By understanding how iconic cultural infrastructures create symbolic capital, policy makers may better tailor similar culture-led branding strategies to other places.

Cities have become playing grounds for competitive behaviour and rapid economic dynamics. But in many cities (or urban agglomerations) economic growth is mainly manifested in specific geographic areas, where creative people and innovative entrepreneurs are located. This paper offers first the foundation for analysing the so-called 'urban buzz' and its interlinked primary drivers. The paper will next develop an analytical framework for testing the buzz hypothesis, with a special reference to the importance of social networks in Amsterdam. In our empirical analysis, we use a unique data set on social network connectivity and spatial concentration in a city, based on location-sharing services through the use of Foursquare. Our urban buzz model shows clearly that buzz and socio-economic (cultural) diversity are closely connected phenomena.

China has become a popular geographic area of research. Researchers make extensive use of Chinese official statistics, but these statistics are often not well understood. This article first clarifies three major issues that affect a wide range of Chinese statistics — from output and employment data to industry profitability — and then elaborates on data sources. The three data issues are changes over time to the sectoral classification system, changes to the ownership classification system, and changes to the coverage of the industry sector. Many of these changes have gone unnoticed or remain poorly understood, leaving the researcher puzzled about varying labels, apparently inconsistent data, and discontinued time series. The second part of the paper offers a gateway to a wealth of Chinese statistics whose existence is not widely known. It also points out the limitations of some of these sources and provides an overview of the secondary literature that discusses the meaning and quality of particular Chinese statistics.

Since the 1998 “wind of falsification and embellishment,” Chinese official GDP statistics have repeatedly come under scrutiny. This paper evaluates the quality of China’s GDP statistics in four stages. First, it reviews past and ongoing suspicions of the quality of GDP data and examines the evidence. Second, it documents the institutional framework for data compilation and concludes on the implications for data quality. Third, it asks how the National Bureau of Statistics could possibly go about credibly falsifying GDP data without being found out. Fourth, it examines if the first-and second-digit distributions of official GDP data conform to established data regularities (Benford’s Law). The findings are that the supposed evidence for GDP data falsification is not compelling, that the NBS has much institutional scope for falsifying GDP data, and that certain manipulations of nominal and real data would be virtually undetectable. Official GDP data, however, exhibit few statistical anomalies (conform to Benford’s Law) and the NBS thus either makes no significant use of its scope to falsify data, or is aware of statistical data regularities when it falsifies data.

This paper applies an alternative model to analyze criminal behaviour by countries based on real option models. Criminal options incorporate a richer framework than traditional cost-benefit models and allow examining the optimal timing of a crime as criminals have the possibility but not the obligation to commit a crime in the near future. From the model, we show how criminal states can actively manage their criminal options. More importantly, we show how the international community can optimally intervene pro-actively, by reducing the incentives for criminal states to execute their criminal options. These novel insights are then applied to two episodes of criminal behaviour by Rwanda in the Democratic Republic of Congo (DRC): the massive killing of Hutu refugees by the Rwanda Patriotic Army (RPA) in late 1996- early 1997 and the illegal exploitation of Congolese resources from August 1998 onwards. This article describes and assesses these activities from this real option perspective.

The entrepreneur,  term coined by European economist Richard Cantillon  in 1755, through his enterprise helps in employment generation, generating national income, dispersal of economic power, balancing regional development and in harnessing youth vigour. It is also defined as ‘the ability of communities to turn grass into gold’. The region of North East India in particular will have to realize how confidently it can rely upon the rural enterprises but for that the Society will have to walk extra-miles with innovation, dedication and determination. In absence of private enterprises in Arunachal Pradesh, there is only Government sector to provide job which is over saturated. Moreover, few jobs, if available, are non-productive clerical type.   Although the State is comparatively peaceful, the North-East Region has been facing problem of militants mainly because of dearth of employment. Setting up VI is therefore the probable answer.

Identifying the impact of local firm concentration on individual firm performance is likely to produce a selection bias related to the positive effects of local concentration if agglomeration economies and natural advantages coincide. We overcome this problem by exploiting exogenous variation arising from a natural experiment. When Germany was divided after World War II, a great many firms fled the socialist East to prevent expropriation and located in random West German regions. Based on micro-level data for the population of firms in the machine tool industry from 1949–-2002, we identify the impact of relocated firms on incumbent firms' survival. We find a negative effect on incumbent survival, suggesting that the costs of increased competition dominate the potential benefits of agglomeration.

It is well-known that there are no pure strategy Nash equilibria (PSNE) in the standard three-candidate spatial voting model when candidates maximize their share of the vote. When all that matters to the candidates is winning the election, however, we show that PSNE do exist. We provide a complete characterization of such equilibria and then extend our results to elections with an arbitrary number of candidates. Finally, when two candidates face the potential entrant of a third, we show that PSNE no longer exist, however, they do exist when the number of existing candidates is at least three.

University graduates in the UK are more concentrated in regions where the cost of housing is higher, implying that they face a higher cost-of-living that could possibly reduce the graduate real wage relative to other groups and carry implications for measures of wage dispersion. This paper reassesses how estimates of wage inequality from 1997 to 2008 vary when regional differences in the cost of housing in the UK are taken into consideration. In order to do so, the real wage is deflated by a specially constructed regional Retail Price Index (RPI); this is a new measure of the cost-of-living that partially updates the national RPI with a regional housing index, therefore allowing the RPI to vary by regions. Results show that the national RPI underestimates the cost-of-living of workers living in the most expensive regions (London, South East) and overestimates the cost-of-living for “cheaper” regions (Northern Ireland, Scotland). When deflating hourly wages by the regional RPI, the average level of wages is lower from 8% to 11% an hour for all workers in London and the South East, but is higher (from 2% to 9%) in the remaining regions; similarly the college –high school wage gap decreases form 6 to 13% in levels when deflating wages by the real regional RPI.

The objective of this paper is to analyze the impact of the creative professions - technological employees and bohemians - on economic growth in Germany’s planning regions. It is concluded that technological employees and bohemians foster economic growth. We find that growth is particularly dynamic in agglomerated and urbanized regions. Among regional factors relevant to the location decisions of creative professionals, diversity is analyzed in particular, as it might stimulate growth because of its potential to increase the rate of interchange of different ideas and knowledge. Diversity is therefore a “knowledge production factor." The analysis of both - creative professions and diversity - is related to two current topics in regional economics, namely the knowledge based economy and its effects on city development, and the topic of creative cities.

Despite recent interest in regionalization of immigration in host nations, most studies have analyzed immigrants’ economic performance by largely focusing on their overall national performance. A regional analysis is necessary because changing geographic distribution of immigrants can affect their economic performance positively or negatively. The present paper focuses on Atlantic Canada whose share in annual Canadian immigrant inflows has been traditionally low, but where recent policy initiatives have resulted in greater attraction and retention of immigrants. Immigrants are found performing better than non-immigrants in regional labor market. The importance of regional analysis of immigrants’ economic performance and contribution in host nations is highlighted.

In this paper we analyze the effects of both tactical and programmatic politics on the inter-regional allocation of infrastructure investment. We use a panel of data for the Spanish electoral districts during the period 1964-2004 to estimate an equation where investment depends both on economic and political variables. The results show that tactical politics do matter since, after controlling for economic traits, the districts with more 'Political power' still receive more investment. These districts are those where the incumbents' Vote margin of victory/ defeat in the past election is low, where the Marginal seat price is low, where there is Partisan alignment between the executives at the central and regional layers of government, and where there are Pivotal regional parties which are influential in the formation of the central executive. However, the results also show that programmatic politics matter, since inter-regional redistribution (measured as the elasticity of investment to per capita income) is shown to increase with the arrival of the Democracy and EU Funds, with Left governments, and to decrease the higher is the correlation between a measure of 'Political power' and per capita income.

Down-payment or closing cost assistance is a commonly used and effective program in addressing the wealth constraints of underserved homebuyers. This paper estimates the impact of the city of Dallas Mortgage Assistance Program (MAP) on neighborhood home values. We define neighborhoods for each sale based on distance from MAP properties, and estimate the difference-in- difference (DID) in home prices between neighborhoods with various numbers of MAP before and after MAP sales. We find that while MAP properties tend to locate in neighborhoods with generally lower property values, the infusion of MAP has no detrimental impact on neighboring property values overall.

We investigate here the agglomeration of spatial clubs in an efficient allocation of a club economy. The literature on agglomeration has focused largely on a primary agglomeration caused by direct attraction forces. We concentrate mainly on secondary and tertiary agglomerations caused by a primary agglomeration. Initially, scale economies in the provision of club goods (CGs) lead each CG to agglomerate in facilities of its club. This primary agglomeration causes a secondary concentration of population around these facilities, which in turn brings about a tertiary agglomeration of facilities of different clubs into centers in the midst of population concentration. The agglomeration of facilities occurs only if a secondary concentration of population takes place. We analyze in detail two specific patterns of agglomeration. One is the central location pattern in which the facilities of all clubs agglomerate perfectly in the middle of the complex. The second is a triple-centered complex in which the center in the middle of the complex consists of perfectly agglomerated facilities of different clubs, each with a single facility per complex. The remaining two centers also consist of facilities of different clubs, but clubs in these centers each have two facilities per complex, one in each center. Each of these two centers is located between a boundary and the middle of the complex closer to the middle of the complex than to the boundary. The facilities in these two centers form condensed clusters of facilities that may contain residential land in between the facilities. We then show that these agglomeration patterns also characterize agglomerations in general. The literature maintains that an efficiently behaving municipality increases its tax-base. This implies that it is in the municipality’s interest to achieve efficiency. The best way for a local government to achieve this desired efficiency is by partially intervening in market operations in order to internalize local externalities. Such an intervention should be limited to providing the city’s infrastructure, to taxing only residential land rents and clubs’ profits, to subsidizing the basic industry of the city, and to partially regulating land uses. Consequently, if the local governments of all complexes behave according to the above, the decentralization of the efficient allocation of the club economy would be attained.

In this paper, we investigate the relationship between economic growth and industrial pollution emissions in China using data for 112 major cities between 2001 and 2004. Using disaggre- gated data, we separate foreign direct investment inflows from Hong Kong, Macao, and Taiwan from those of other foreign economies. We examine two industrial water pollution indicators (wastewater and petroleum-like matter) and four industrial air pollution indicators (waste gas, sulfur dioxide, soot, and dust). Our results suggest that most air and water emissions rise with increases in economic growth at current income levels. The share of output of domestic- and foreign-owned firms increases several pollutants in a statistically significant manner while output of firms from Hong Kong, Macao, and Taiwan either reduces pollution or is statistically insignificant. In this paper, we examine the relationship between economic growth, FDI, and the environment in China. We make three specific contributions to the growth-environment literature. First, we focus specifically on China given the undeniable strain such a large and rapidly growing economy is placing on the natural environment. Studies investigat- ing these issues in China are relatively scarce. Second, since the majority of industrial emissions are released in urban areas, we concentrate our analysis on Chinese cities and examine the city-level characteristics that influence industrial emissions. We believe the use of city-level variables provides more potential explanatory power than the use

We study how the city system is affected by the possibility for the members of the same cultural diaspora to interact across different cities. In so doing, we propose a simple two- city model with two mobile cultural groups. A localized externality fosters the productivity of individuals when groups interact in a city. At the same time, such interaction dilutes cultural identities and reduces the consumption of culture-specific goods and services. We show that the two groups segregate in different cities when diaspora members find it hard to communicate at distance whereas they integrate in multicultural cities when communication is easy. The model generates situations in which segregation is an equilibrium but is Pareto dominated by integration.

The paper aims at testing Florida’s concept of the Creative Class using panel data for 323 West German regions for the time period 1975 – 2004. We apply two different estimation methods, a panel VAR for the complete data set and a dynamic system approach based on GMM for a modified data set collapsed to six five-year periods. We find that the local concentration of the Creative Class has predictive power for the economic development of a region and tends to outperform traditional indicators of human capital. However, our results do not support Florida’s assertion that the creative workers flock where the Bohemians are. According to our findings, the Creative Class is attracted by favorable economic conditions as indicated by employment growth or an increasing wage bill.

Like many other assets, housing prices are quite volatile relative to observable changes in fundamentals. If we are going to understand boom-bust housing cycles, we must incorporate housing supply. In this paper, we present a simple model of housing bubbles which predicts that places with more elastic housing supply have fewer and shorter bubbles, with smaller price increases. However, the welfare consequences of bubbles may actually be higher in more elastic places because those places will overbuild more in response to a bubble. The data show that the price run-ups of the 1980s were almost exclusively experienced in cities where housing supply is more inelastic. More elastic places had slightly larger increases in building during that period. Over the past five years, a modest number of more elastic places also experienced large price booms, but as the model suggests, these booms seem to have been quite short. Prices are already moving back towards construction costs in those areas.

Interregional differentials in nominal wages in the Russian Federation are huge compared to other countries. Using the NOBUS micro-data and a methodology based on the estimation of the wage equation augmented by aggregate regional characteristics, we show that these differentials have a compensative nature. Russian workers receive wage compensations for living in regions with a higher price level and worse non-pecuniary characteristics, such as a relatively low life expectancy, a high level of air pollution, poor medical services and a colder climate. After adjusting for these regional characteristics, the relative ranking of regions in terms of average wages changes considerably. Moreover, regional nominal wages become positively correlated with interregional migration flows. According to our estimates, half of the interregional wage variation between workers with similar productive characteristics should be considered to be compensative. These results support the view that the best policy reaction to the current high interregional wage differentials should be the removal of migration barriers and a reduction in migration costs. In general, our results show that wage compensations for regional disamenities along with differences in employment composition are able to account for about three fourths of the observed interregional variation in wages.

The recent decline in American manufacturing probably reflects long-run problems. A sensible approach to revitalizing American manufacturing would focus on overcoming inefficiencies in the development of manufacturing, such as problems in smalland mediumsized manufacturers getting information about deploying new technologies. This approach to revitalizing manufacturing can best be implemented through federal efforts to encourage and support state and local economic development policies that help enhance manufacturing productivity. A decentralized approach to the revitalization of manufacturing encourages a variety of creative policies, is adaptable to local conditions, and is consistent with American political traditions. I. THE PROBLEM: THE RECENT DECLINE IN AMERICAN MANUFACTURING The decline in manufacturing is a growing national issue, affecting all U.S. regions. For example, from the recession’s beginning in the first quarter of 2001 until the first quarter of 2003, real earnings in manufacturing declined 9.1 percent nationally, with real earnings in manufacturing declining at least 5 percent in every major region of the United States. The manufacturing decline is more severe in employment, but also occurs in output. Manufacturing employment declined around 14 percent from the beginning of the recession, but manufacturing output declined about 7 percent. II. REASONS FOR THE DECLINE The manufacturing decline is probably more than a temporary, recession-related phenomenon. Manufacturing output declined by 7 percent from the beginning of the recession to its end in November 2001, and it has essentially stagnated ever since. Recession-induced job losses may be temporary or permanent. This recession has caused fewer temporary layoffs and more permanent layoffs than is usually the case. This recession and recovery have thus far been accompanied by greater than usual “structural shifts” in employment across different industries. In addition to being caused by the recession, the manufacturing decline in output is associated partially with recent trade trends (about one-fourth due to trade according to one estimate), and partially with unusually high productivity growth. The U.S. trade problems in manufacturing may be caused by “temporary” factors, such as an overvalued dollar, and may be caused by longer-run shifts in comparative advantage that favor lower-cost overseas production. Manufacturing has also had unusually high productivity growth for a recessionary period, which

Empirical evidence suggesting that a considerable amount of horizontal strategic interaction exists amongst governments is important in light of recent devolutionary trends of many important public programs. The empirical approach in these studies typically relies on estimating reaction functions in a uni-dimensional policy framework, where a nonzero slope estimate is interpreted as evidence in support of strategic interactions. While this framework is a useful representation within certain contexts, it is potentially too restrictive; for example, in models of resource competition, localities may use multiple instruments in their recruiting pursuits, leading to potential strategic interactions across policy instruments. In this study, we first develop a simple theoretic construct that includes resource competition in a world of three-dimensional policy choice. The model suggests that while a zero-sloped reaction function may exist for any particular policy, this does not necessarily imply the absence of strategic interactions. We examine the implications of the model empirically using US state-level panel data over the period 1977–1994. The results suggest that important cross-policy strategic interactions exist, lending support in favor of the multi-dimensional framework, and indicate that uni-dimensional frameworks may present lower bound estimates of the degree of strategic interaction.

Regional unemployment rates in the European Union (EU-15) reveal a core-periphery structure. Large ?core? regions in the middle of the continent have low unemployment rates, whereas excessive mass unemployment is predominantly found in the peripheral regions at the outside borders of EU-15. This geographical pattern of unemployment rates follows the pattern of GDP per capita. That is, the regions with low (high) unemployment rates on average have comparatively high (low) real income levels. In this paper we try to understand this stylised fact with the help of a theoretical model that builds on two strings in the literature: the recent trade and location theories (like the ´new economic geography´) and the ´wage curve´. Standard models of the new location theories deal with regional disparities in production and income, but they usually assume full employment and are thus ill-equipped to study spatial unemployment disparities. The wage curve-approach, which explicitly shows how disparities in real wages and unemployment rates are interrelated, can not endogenously explain the origin of these asymmetries. In this paper, we combine these previously unrelated strings and develop a unified theoretical framework. We show that a core-periphery in real wages is associated and magnified by regional unemployment disparities. This wage curve relation is stable over time with an increasing returns technology. That is, the wage curve does not vanish as workers move from the periphery to the core, but it is rather reinforced by migration. These theoretical predictions of our model are in line with the empirical evidence.