Entrepreneurship and spatial externalities: Theory and measurement

The paper presents an empirical analysis on the role played by urbanisation and localisation economies on factor productivity of firms. A vast literature exists on this issue, conceptually presenting reasons supporting either industry size or city size as sources of external advantages. In general, the empirical analyses are based on the estimates of aggregate city or industry production functions; the limited hypotheses characterising these studies have suggested to test another methodology, based on the estimate of a production function at the firm level, and calculate how factor productivity changes according to different degrees of urbanisation and localisation economies. The methodology is applied to firms chosen in the high-tech sector, which demonstrates a high spatial concentration in particular areas of the Metropolitan Area of Milan. The result is that factor productivity is influenced by both urbanisation and localisation economies, but the latter show an increasing positive effect on factor productivity. Moreover, the size of firms plays an important role in defining the impact of urbanisation and localisation economies on firms' outcome.     

Rank-size distribution of urban employment in labour market areas

This paper examines the rank-size distribution of employment in cities considering the designation of unified labour market areas (LMAs). The empirical application refers to Greece and the dataset includes population and employment at the municipal and local commune levels as well as LMAs originating from commuting patterns between communes. It is found that the employment rank-size distribution based on municipalities substantially overestimates the size of smaller peripheral town areas, where labour agglomerations typically take place at finer spatial scales, and underestimates agglomerations around larger urban areas. The use of LMAs as an alternative spatial unit of analysis entails a less even geographical distribution of workers, particularly when adopting a 10% commuting threshold. Moreover, a threshold regression is used to facilitate the distinction between urban and rural areas, specifying the LMA size beyond which substantial urbanisation effects arise and signifying that about 80% of the total employment corresponds to urban employment. The findings can have important implications for the formulation and evaluation of policies to manage labour agglomeration economies in metropolitan and peripheral urban and rural areas for the sustainable and equitable growth of a country.     

Geographic localisation of knowledge spillovers: evidence from high-tech patent citations in Europe

The focus in this paper is on knowledge spillovers between high-technology firms in Europe, as captured by patent citations. The European coverage is given by patent applications at the European Patent Office (EPO) that are assigned to high-technology firms located in Europe. By following the paper trail left by citations between high-technology patents we adopt a case–control matching approach to test the extent of localisation of knowledge spillovers at two geographic levels, the region and the country level. This approach views a finding of disproportionate co-location of patent citations relative to co-located control patents as evidence of localised knowledge spillovers. To disentangle border from geographic distance effects the paper adopts a Poisson spatial interaction modelling perspective. The findings of the study not only indicate that localisation of knowledge spillovers exists, but also that national border effects are more important than geographical distance effects. Thus, knowledge flows within European countries more easily than across. Not only geography matters, but also technological proximity. Interregional knowledge flows are industry specific and occur most often between regions located close to each other in technological space.     

Footloose: An analysis of the drivers of firm relocations over different distances

This paper examines the differences in the drivers of short and long distance firm relocations by conducting an event history analysis on a panel dataset of Dutch firms. Our findings indicate that short distance relocations (within municipalities and labour markets) are triggered by growth and the corresponding need for more space, while longer distance relocations are mainly influenced by regional characteristics. The spatial concentration of similar or related firms, a higher level of urbanization and R&D intensity keep firms from leaving their labour market region, but firms are more inclined to leave regions with a higher share of innovative firms.     

Spatial activity and labour market patterns: A connectivity analysis of commuting flows in Germany

The spatial activity patterns of firms in a multi-regional system are closely connected with the structure and evolution of regional labour markets. Based on an extensive data set (cross-section) on commuting flows in Germany, this paper aims to identify the relationship between entrepreneurial activity and spatial labour markets, by employing in particular the concept of ‘entrepreneurial city’. A network connectivity model is adopted to assess connectivity patterns, using the power-law and exponential law as a statistical test framework, in order to detect the presence of economic activity hubs that may resemble the concept of entrepreneurial cities. Various results are presented and interpreted in the final part of the paper.     

A short-term forecasting model for sectoral regional employment

Problems associated with employment have become a major issue in regional economics, especially in those countries, such as Spain, where unemployment represents a serious threat to regional stability. In this context, the purpose of our paper is twofold: first, to develop a prediction instrument for regional employment, one which should be flexible and efficient; secondly, to use this instrument in order to make a short term forecast of sectoral regional employment (and the labour force) of a characteristic region of Spain, namely Aragón. The type of instrument used is an econometric time series model specified in a regional context. This means that attention must be given to the spatial structure of the labour markets. One way to introduce this effect may be through the specification of a transfer function which connects the regional market to the national one. This approach is an improvement on the traditional technique of univariate time series. Furthermore, for small labour markets it is important to assess the incidence of outliers, especially for forecasting purposes, because they distort the statistical inference. Received: November 1996 / Accepted: November 1997     

Factors conditioning the formation of European regional convergence clubs

Recent findings have indicated the existence of European regional clubs. In the following paper, we examine factors conditioning the distribution of European regional GDPpc by estimating conditioned stochastic kernels, arguably the best method for whole distribution or partial conditionings. We also compute conditioned Markov chains for the conditioning factors detected and their sensitivity to changes in probability. Our results show that a country’s fiscal policies to reduce within country inequalities remain the key factor in escaping from backward clubs, together with the integration of women into the labour market. The average number of patents and low-tech manufacturing specialisation indexes are also considered key factors.     

Quantity adjustments in the regional labour markets of EU candidate countries

Abstract.  The article comprises an analysis of the adjustment of regional labour markets of former (and present) EU candidate countries to asymmetric shocks. As in EU member states, a substantial part of the adjustment to changes in employment in candidate countries is carried by participation decisions, and migration plays a small role. Candidate countries, however, have experienced larger region-specific shocks to labour demand than member states, and these shocks lead to higher long-run changes in employment. Furthermore, adjustment mechanisms partly explain high regional unemployment. High unemployment regions exhibit a lower capability to absorb region-specific shocks through mechanisms other than higher unemployment.     

Regional manufacturing employment cycles revisited

Earlier studies have attributed cyclical variations in regional manufacturing employment to differences in the regions industrial compositions and growth rates. Using OLS regressions, this paper demonstrates that the ownership characteristics of a region's manufacturers (branch plants versus unit concerns) and the location of the area with respect to national and regional markets were also factors that influenced the sensitivity of a region's manufacturing employment to fluctuations in aggregate demand. Areas with a relatively high concentration of multi-unit firms and geographically isolated regions experienced greater cyclical severity in manufacturing employment. This increased cyclical severity resulting from the tendency of multi-unit firms to: (1) consolidate production during periods of depressed demand through closing their high cost facilities, and (2) accommodate increased sales and reduce transportation costs during prosperity by opening branches outside the population centers.     

Social networks and regional recruitment of foreign labour: Firm recruitment methods and spatial sorting in Denmark*

This paper tests the hypothesis that social networks are crucial for regional recruitment and inflows of foreign labour. New survey data on 971 firms located in Region Southern Denmark show that the predominant recruitment method of foreign labour was through networks. Danish municipal data from 1997–2006 furthermore reveal spatial sorting since initial shares of employees with a foreign background out of total regional employment predict foreign labour inflow rates to regional employment. Thus, social networks appear crucial for the recruitment and inflows of foreign labour, suggesting that employee referrals and information about vacancies in local job markets are also important for foreign labour. Resumen Este artículo pone a prueba la hipótesis de que las redes sociales son cruciales para la contratación regional y los flujos de mano de obra extranjera. Nuevos datos de una encuesta sobre 971 empresas ubicadas en la Región de Dinamarca Meridional muestran que el método de contratación predominante de mano de obra extranjera fue a través de redes. Datos municipales daneses de 1997‐2006 revelan además una clasificación espacial, ya que las cuotas iniciales de empleados de origen extranjero respecto del empleo regional total predicen tasas de afluencia de mano de obra extranjera para el empleo regional. Por tanto, las redes sociales parecen ser cruciales para el reclutamiento y la afluencia de mano de obra extranjera, lo cual sugiere que las referencias de los empleados y la información sobre ofertas de empleo en los mercados laborales locales son también importantes para la mano de obra extranjera.      

Advanced communications and employment creation in rural and peripheral regions: a case study of the Highlands and Islands of Scotland

Over the last decade, the potential of Advanced Communications (ACs) to contribute to regional economic development has been of increasing interest to policy makers. Recent policy in Europe has focused particularly on how ACs can contribute to job creation in peripheral or less favoured regions, through various forms of teleworking. This paper argues that most policy initiatives in this area have been underlain by a conceptual model which assumes that advanced infrastructure and services will contribute to job creation (or preservation) through improving the competitiveness of existing regional firms, particularly SMEs, through enhancing access to core markets. The paper questions the empirical validity of this model and proposes, on the basis of a case study of the Highlands and Islands of Scotland, that in reality employment growth is more likely to result from inward investment — from exogenous firms accessing under-utilised regional attributes such as labour supplies — than through growth in indigenous firms.     

Human capital and market size

This paper studies how the size of the labour market affects workers' decisions to invest in human capital. We consider a model of mismatch where firms rank workers according to their level of skills. The matching process operating in the market has the property that the job finding probability of workers depends on market size, market tightness and their ranking. The model is consistent with several facts highlighted in empirical studies: in bigger markets the distribution of human capital is more unequal and the returns to skill are higher.     

Weighted convergence and regional growth in China: an alternative approach (1952–2008)

This paper analyses the convergence behaviour of labour productivity, capital intensity and TFP across 28 Chinese regions from 1952 to 2008 by using the dynamics of the distribution approach. Unlike other works, we take into account the population and economic size of each region in the analysis as well as the spatial dimension in the convergence process. Our results indicate that un-weighted analysis provide a limited information of the convergence behaviour, since the weighted analysis matter in that process. Besides, although the multimodality prevails in all the analysis made, we find that convergence in labour productivity is mainly driven by capital intensity. In addition, it is also observed two distinctive clubs in the distribution of TFP that may account for the different speed of regional development in China. These results suggest the need to promote further economic policies in the Chinese economy.     

Creativity,education or what? On the measurement of regional human capital

This paper substantiates the debate following Richard Florida's suggestion to measure regional human capital by creative occupations rather than education. Consistent with Florida's notion of creativity, it suggests a microfoundation that relates creativity to workers’ cognitive and non‐cognitive skills. It shows that this microfoundation is similar to that of human capital in recent labour economics, which has facilitated important new insights. While the regional measures of creative occupations developed by Florida or others are too crude to make a difference, occupations may help project workers’ cognitive and non‐cognitive skills from the micro to the regional level.     

Do high-quality local institutions shape labour productivity in Western European manufacturing firms?

We investigate the extent to which regional institutional quality shapes firm labour productivity in Western Europe, using a sample of manufacturing firms from Austria, Belgium, France, Germany, Italy, Portugal and Spain, observed over the period 2009–2014. The results indicate that regional institutional quality positively affects firms' labour productivity and that government effectiveness is the most important institutional determinant of productivity levels. However, how institutions shape labour productivity depends on the type of firm considered. Smaller, less capital endowed and high-tech sectors are three of the types of firms whose productivity is most favourably affected by good and effective institutions at the regional level.     

Agglomeration and productivity: evidence from firm-level data

Do agglomerations stimulate productivity? An extensive literature on agglomeration economies, or urban increasing returns, has analyzed this question with aggregated spatial data. This paper estimates the relationship between agglomeration and productivity at the firm level using static and dynamic models. It makes use of a rich dataset comprising register information on all manufacturing firms in Sweden with 10 or more employees over the period 1997–2004. Three things emerge. First, firms located in larger regions are more productive when controlling for size, human capital, physical capital, ownership structure, import and export, industry classification, and time trend. Second, results from dynamic panel estimations suggests a learning effect in that agglomeration enhances firms’ productivity. Third, the role of agglomeration phenomena does not seem to have a clear coupling to firm size.     

Ethnic origin, local labour markets and self-employment in Sweden: a multilevel approach

We investigate the importance of ethnic origin and local labour markets conditions for self-employment propensities in Sweden. In line with previous research, we find differences in the self-employment rate between different immigrant groups as well as between different immigrant cohorts. We use a multilevel regression approach in order to quantify the role of ethnic background, point of time for immigration and local market conditions in order to further understand differences in self-employment rates between different ethnic groups. We arrive at the following: The self-employment decision is to a major extent guided by factors unobservable in register data. Such factors might be, that is, individual entrepreneurial ability and access to financial capital. The individual’s ethnic background and point of time for immigration play a smaller role for the self-employment decision but are more important than local labour market conditions.     

The spatial distribution of inventor networks

Inventor networking has become both more feasible with improved telecommunication and more important as it usually produces research of higher quality. Despite overwhelming evidence on the benefits of collaboration, patent data from 1994 to 2001 in Sweden demonstrate that inventor networks are not very common. Moreover, the spatial distribution of inventor networks is not uniform. It appears that agglomeration measured both as employment density and as industry diversity, plays a role in explaining networking. Our results indicate that inventor networks are more likely to exist in densely populated areas with a diversified industry. Market size has a negative impact on networking in that we can observe that inventor networks are less common in large metropolitan areas, ceteris paribus. Hence, it supports the proposition that networking can act as a substitute to agglomeration. Our results also suggest that researchers in dense areas will not only collaborate more; they will also collaborate over longer distance.     

Human capital as a location factor: An empirical investigation of relocating firms and their labour force in the Netherlands

This paper examines the role of human capital as a location factor in the context of long‐distance firm relocations. Using rich register data on single‐plant firms in the Netherlands 2006–2011, the paper enquires into whether relocation is motivated by the wish to improve the access to employees and the quality of labour force. Not disrupting existing spatial relationships is a prominent consideration of relocating firms, yet in general, relocation does not result in a better spatial match. Some evidence is found for firm‐specific human capital functioning as a keep factor. Relocating firms retain predominantly highly skilled employees, but general human capital itself functions neither as a keep factor nor as a pull factor.