The identification of functional regions: theory, methods, and applications

A functional region is characterised by a high frequency of intra-regional interaction. The text analyses how functional regions can be identified by using labour market data. Three approaches are applied in this task, named the local labour market, commuting zone, and accessibility approach, respectively. The text includes an application using the Fyrstad region. The situation is also studied at two points in time. The outcomes using the different approaches are compared, and the results combined have a richer flavour.

Industrial diversity and metropolitan unemployment rate

The main goal of our study is to evaluate whether or not industrial diversity helps reduce the frictional unemployment rate of a metropolitan area. We used a data set from Japan’s 118 metropolitan areas. Our analysis shows that although industrial diversity might reduce the frictional unemployment rate of a metropolitan area, its effect is not statistically significant in our model. Second, the location quotient for industries, considered to be related to types of unemployment other than frictional, has a stronger impact on unemployment rate than industrial diversity does. In particular, it was found that the location quotients for both the manufacturing and the construction industry have a negative relationship with the unemployment rate of a metropolitan area. We also discovered that the higher the percentage of graduates of post-secondary institutions there are in a metropolitan area, the lower its unemployment rate will be.

Matching in the labour market: modelling spatial aspects of the Swedish unemployment benefit rules

In this paper, some consequences of the Swedish unemployment benefit rules are studied. This is achieved by introducing geographical mobility into a labour market matching model. Jobseekers and vacancies are unevenly distributed across space. Therefore, both the probability that a jobseeker will find a job and the probability that a vacancy is filled during a period vary across locations. Moreover, these differences are followed by spatial differences in both the duration of unemployment and vacancy times. It is shown that the potential of geographical mobility to increase the number of matches is limited in a labour market with few or many vacancies per jobseeker. In these labour markets, mobility mostly affects which jobseekers find a job during a period. In a relatively better balanced labour market, the number of matches could be increased by additional mobility.     

Production and work in the American metropolis: a macroscopic approach

In this paper, I pursue the idea that large and small metropolitan areas are subject to distinctively different technological, organizational, and employment dynamics. This idea is considered both in general terms, and, more specifically, in the light of the emerging cognitive-cultural economy in the United States Two main bodies of empirical evidence are invoked in a series of hypothesis-testing exercises. One of these is focused on 6-digit manufacturing sectors in metropolitan areas; here, the objective is to reveal by means of regression analysis the basic dimensions of locational sorting across the metropolitan hierarchy. The other revolves around detailed census occupational groupings and the different ways in which their functional relations to data, people, and things are reflected in their spatial dynamics. The evidence presented suggests that the competitive advantages of large metropolitan areas reside above all in forms of economic activity marked by high levels of operational instability and product differentiation as expressed, among other things, in labor-intensive technologies and discretionary labor processes. The competitive advantages of small metropolitan areas flow from a converse set of characteristics. It is also shown that the new cognitive-cultural economy of the United States is being ushered in via metropolitan areas at the top of the urban hierarchy. This research was supported by a grant from the Richard S. Ziman Center for Real Estate at UCLA, with supplementary funding from a Faculty Research Grant awarded by the Academic Senate of UCLA. I wish to thank David Rigby and two anonymous referees for their insightful comments on an earlier draft of this paper.     

Growth and change in U.S. micropolitan areas

The U.S. Census Bureau has now recognized micropolitan places, which are sometimes called emerging metropolitan areas or mini-metros. After the 1990 census, a total of 581 different non-metropolitan counties, forming 496 consolidated micropolitan areas, were assigned to this new settlement category. The first half of the paper analyzes the evolving geographic distribution and the shifting employment attributes (emphasizing job specialization) of these places during 1980–2000. Changes in the U.S. micropolitan landscape, reflecting the impressive growth of these places during the late 20th century, mirror other well-known national demographic and economic trends. The second half of the paper analyzes simultaneous population and employment change in micropolitan counties, using a series of partial adjustment models that control for various demographic, economic, and geographic factors. Evidently (initial and adjusted) population levels have induced both employment and population change in these places, but employment levels have failed to have the same impact.

The geography of collaborative knowledge production in Europe

We analyse inter-regional research collaboration as measured by scientific publications and patents with multiple addresses, covering 1316 NUTS3 regions in 29 European countries. The estimates of gravity equations show the effects of geographical and institutional distance on research collaboration. We also find evidence for the existence of elite structures between excellence regions and between capital regions. The results suggest that current EU science policy to stimulate research collaboration is legitimate, but doubt the compatibility between EU science policy and EU cohesion policy.     

Restricting access in a job chains model of local employment creation

The job chains model of local labor market change is a demand-driven analytic device for estimating the effects of new job creation. This paper explores the effects of restricting supply, i.e., limiting job access, on the model’s primary outcomes: vacancy chain multipliers, welfare effects, and distributional impacts. Major sources of labor supply are the local unemployed, out of the labor force and in-migrants. Three simulations are reported relating to (1) restricting new jobs to current local residents (i.e., no in-migrants), (2) restricting new jobs to current residents in the first round of hiring only, and (3) restricting hiring to local unemployed/out of labor force on the first round alone. The results are compared to the basic model that assumes no supply-side restrictions. In terms of chain length, welfare effects, distributional impacts, and policy palatability, first-round restrictions on in-migrants would seem to be the most plausible option. However, as an economic development strategy, well-targeted demand-side initiatives would still seem to be preferable.

Urban growth effects on rural population, export and service employment: evidence from eastern France

This paper examines how the spatial pattern of urban growth in functional economic regions influences the interplay of rural export employment, rural services employment, and population change in rural areas. Using an extension of the Boarnet’s model (Papers in Regional Science 73:135–153, 1994), we find that urban spread effects to rural areas in France are more likely than urban backwash effects, and that spatial urban (both dynamic and static) externalities affect rural population and employment growth. In the functional economic regions where the urban core is declining and the urban fringe is expanding, urban population growth involves an increase in rural export employment, and larger change in service employment favors rural population growth. However, urban export job growth reduces the growth in rural service jobs and expanding urban service jobs reduce rural export jobs, suggesting that expanding urban employment opportunities draws employees away from proximate rural communities. Conversely, where both urban core and fringe are growing, we observe an urban spread effect from the urban export sector to rural services—an export base multiplier effect with a spatial dimension—and from urban population growth to rural service employment.

Regional costs-of-living with congestion and amenity differences: an economic geography perspective

Standard models of the “new economic geography” predict that costs-of-living are low in the central and high in peripheral region, due to the fact that consumers in the periphery have to bear transportation cost for manufacturing varieties. In reality, however, only some goods are cheaper in economic centres, whereas the overall costs-of-living (including housing costs) tend to be higher. In this paper we use an analytically tractable economic geography model with an immobile housing stock, so that regional agglomeration drives up housing prices. We show that a core-periphery structure can endogenously emerge in which the core is the more expensive area in equilibrium. We also analyse the efficiency of spatial cost-of-living differences and augment the model to include an exogenous regional difference in the form of a consumption amenity.     

Sequencing and scheduling highway network expansion using a discrete network design model

The motive behind this paper is to produce an NDP model that prescribes the final shape of a transportation network and the sequence and schedule of facility construction during the planning span as well. The proposed bi-level NDP model fills the gap between existing NDP models and practitioners’ needs because, in practice, planners have to select investment projects on a year-by-year basis. Conversely, existing models suggest only the optimal network configuration for a planning horizon. A genetic algorithm and a simulated annealing algorithm are proposed along with an exhaustive search algorithm as solution algorithms. Testing these algorithms with an example problem revealed that the simulated annealing worked superiorly to the genetic algorithm. The paper also demonstrates that the model is applicable to a real world problem by showing that the computational time needed to solve the example problem is not prohibitively large.     

Redispersion is different from dispersion: spatial economy of multiple industries

In the literature of new economic geography, it is observed that the manufacturing sector disperses because of high transportation costs, agglomerates for intermediate transportation costs, and redisperses for low transportation costs. This paper examines a model with multiple manufacturing industries and finds that the redispersion process is different from the dispersion process. More precisely, there is at most one industry that disperses in the redispersion process while all industries disperse in the dispersion process. Furthermore, it is shown that the interaction of demand, increasing returns, and transportation costs is enough to derive a separating equilibrium where at least two industries agglomerate in different regions.

Knowledge flows across European regions

The recent resurgence of growth studies has clearly established that technological progress and knowledge accumulation are among the most important factors in determining the performance of regional and national economic systems. In this paper we propose new evidence on knowledge flows across European regions based on patenting at the European Patent Office. We examine in- and out-flows of patent citations as a proxy of knowledge connections, while looking also at their dynamics through time. The econometric analysis is based on a model where the exchange of knowledge across regions is mainly affected by geographical distance together with a set of spatial variables. The main result is that knowledge flows decrease as the geographical distance between the origin and the destination region increase. Furthermore, knowledge flows tend to be higher among contiguous regions and areas within the same country. These results prove to be robust with respect to the inclusion of other characteristics of the origin and destination regions (production structure, economic conditions and technological efforts) as well as different estimation methods.     

Urbanization process and land use policy

Within a framework of NEG model, this paper intends to show that urbanization rate is determined as a synthetic result of rational behavior of each socio-economic agent. In particular, a model is constructed with bearing in mind to explain the urbanization process in China such that the role of government in managing land use is explicitly incorporated and policy effects can be evaluated. Some results of theoretical analysis and numerical simulation analysis are contrasted with the ones of Fujita-Krugman (Reg Sci Urban Econ 25: 505–528, 1995) incorporating land into a NEG model as well.     

Regional variations in the price of building land: a spatial econometrics approach for West Germany

In this paper, we analyze the enormous variation in the price of building land across West German regions. We outline a theoretical model that ties a household’s willingness to pay for building land to the inter-temporal value of employment. Using data for NUTS 3 regions the theoretically derived impact of labor market variables and other influences is investigated. We show that spatial dependence through spatially lagged variables plays a crucial role. According to our findings, the variation in the price of building land can be explained reasonably well if one adequately takes into account the specific patterns of spatial interaction.     

Is human capital accumulation a self-propelling process? Comparing educational attainment levels of movers and stayers

The paper aims at understanding changes in the distribution and accumulation of intellectual capital. It compares the educational profiles of in-migrants and non-migrants across a sample of 303 U.S. counties and tests a stock-flow model that poses that a well-educated population stock attracts a well-educated migrant flow. The results suggest that newcomers are better educated than the resident population, and the education gap is most pronounced for newcomers from other states. The results further suggest that the educational status of newcomers (“in-migrants”) is positively related to the educational status of the resident population (“stayers”), thus implying a further agglomeration of human capital across space. However, for interstate migrants the effect is context-dependent, playing a greater role in urban settings and diminishing in more rural settings.     

Locational disadvantage of the hub

We show how spatial evolution is different between the two representative models of economic geography: [Krugman 99:483–499, 1991] and [Ottaviano et al. 43:409–436, 2002]. We analyze the impacts of falling transport costs on the spatial distribution of economic activities and welfare for a network economy consisting of three regions located on a line. It is normally considered that a hub city, i.e., a central region, always has locational advantage and manufacturing workers gain from trade. This is true in the former model, but not in the latter when markets are opened up to trade. This is because the price competition is so keen in the central region that the manufacturing sector moves to the peripheral regions, which aggravates the social welfare. We then show that when goods are close substitutes and share of manufacturing is of an intermediate level, the manufacturing activities completely disappear from the central region leading to a full agglomeration in one peripheral region.

Examining the location factors of R&D labor in the regions of Greece

In this paper two models are developed in an attempt to elucidate the factors that influence the regional distribution of R&D labor across the regions of Greece. The first one is based on an adaptation of the [Guerrero and Seró (1997) Regional Studies 31:381–390] model to the Greek context treating the regional distribution of R&D labor as a function of the extent of agglomeration and the prevailing economic conditions. The second model extends the first one by taking into account two additional factors, viz. the production structure and infrastructure. The econometric results indicate the superior performance of the extended model in the context of Greece as well as attribute the location of R&D labor mainly on the diversification of industrial activity and the number of establishments in innovation-intensive sectors. It is therefore suggested that the stimulation of the regional production structure and infrastructure is essential for ‘knowledge-lagging’ regions.

Mexican northern border municipalities, financial dependence and institutions

Mexican northern border municipalities have experienced economic and populational growth rates that are much higher than other Mexican regions resulting in higher demand for public services and infrastructure. The different institutional framework, both fiscal and legal, faced by municipalities in every Mexican State might impact the fiscal behavior of local governments. This article examines whether border municipalities are more financially dependent on central authorities due to the high demand for public services in their jurisdictions and their inability to obtain sufficient funding. Several econometric models are estimated for 300 Mexican municipalities in the year 2000. A strong and negative relationship between income and financial dependence is found, as expected. We also learned that institutional and regional factors should not be omitted in the model specifications. Statistical theory based on the estimations shows that the border municipalities of Ciudad Juárez and Puerto Peñasco have systematically lower financial dependence than others. However, there is no general rule regarding border municipalities and financial dependence.     

Market access and regional disparities

New economic geography (NEG) has reached a theoretical consolidation while related empirical tests are still scarce. The present paper aims at providing some evidence on the validity of forces emphasized by NEG. The analysis starts from the nominal wage equation derived from the Krugman “core–periphery model” and focuses on one of the main propositions of NEG that access advantages raise factor prices. The paper investigates the significance of market access for regional wages and the geographic extent of demand linkages for a cross section of European regions, also taking into account the effects of national borders. The regression analysis covers the period between 1985 and 2000. The results are consistent with the implication of NEG that demand linkages affect the geographic distribution of economic activities, confirming the basic findings of previous analyses. However, regarding the spatial extent of demand linkages, our results differ significantly from previous findings that point to highly localised effects.

Toll roads and economic development: exploring effects on property values

An increasing number of toll projects are being considered across the country, and questions are often raised about the impact of toll roads on the economy and economic development in the region. This paper examines the effects of toll roads in a major metro area. Toll roads in Dallas County, Texas, are examined for their impacts on property values, one indicator for economic development impacts. Particular emphasis is placed on the temporal and spatial nature of the impacts. The paper examines impacts of existing toll roads using residential transactions data spanning a period of 20 years and a combination of traditional and spatial econometric approaches.