THE IMPACT OF LOCAL DECENTRALIZATION ON ECONOMIC GROWTH: EVIDENCE FROM U.S. COUNTIES*

ABSTRACT We analyze the impact of fiscal decentralization on U.S. county population, employment, and real income growth. Our findings suggest that government organization matters for local economic growth, but that the impacts vary by government unit and by economic indicator. We find that single‐purpose governments per square mile have a positive impact on metropolitan population and employment growth, but no significant impact on nonmetropolitan counties. In contrast, the fragmentation of general‐purpose governments per capita has a negative impact on employment and population growth in nonmetropolitan counties. Our results suggest that local government decentralization matters differently for metropolitan and nonmetropolitan counties.     

SPREAD AND BACKWASH EFFECTS FOR NONMETROPOLITAN COMMUNITIES IN THE U.S.

Few studies empirically estimate the effects of metropolitan growth on nonmetropolitan communities at a national scale. This paper estimates the growth effects of 276 MSAs on population in 1,988 nonmetropolitan communities in the United States from 2000 to 2007. We estimate the distance for growth spillovers from MSAs to nonmetropolitan communities and test the assumption that a single MSA influences growth. We compare three methods of weighting cities’ influence: nearest city only, inverse‐distance, and relative commuting flow to multiple cities. We find the inverse‐distance approach provides slightly more reliable and theoretically supportable results than the traditional nearest city approach.     

THE INFLUENCE OF ECONOMIC DIVERSITY ON UNEMPLOYMENT AND STABILITY*

ABSTRACT. For many years, regional scientists, economists, and geographers have been unable to clarify the influence of economic diversity on unemployment and instability in regional economies of the United States, the United Kingdom, and Canada. This article presents plausible theory, proper units of analysis, valid measures, and more inclusive models of the diversity-stability relationship. The findings are generalizable because the sample includes most metropolitan areas in the U.S. The empirical analysis estimates the influence of diversity, employment concentrated in unstable industries, population size, growth rate, and control variables on unemployment and employment instability during the 1972–88 period. The results indicate that metropolitan areas which are more diverse experience lower unemployment rates and less instability than areas which are less diverse.     

Regional Specialization and Industrial Concentration Patterns in the Turkish Manufacturing Industry: An Assessment for the 1980–2000 Period1

Previous studies on geographical distribution of economic activity in Turkey demonstrate that firms are localized in major metropolitan areas as well as a set of emerging regions. The aim of the paper is to complement the findings of the studies on regional and industrial concentration in Turkey's manufacturing industry by exploring whether regional specialization and industrial concentration patterns changed during the 1980–2000 period. The paper further aims to explore the driving forces of industrial concentration in Turkey's manufacturing industry, particularly during Turkey's economic integration process that started with trade liberalization after 1980 and further developed with the Customs Union in 1996. Regional specialization and industrial concentration are measured by GINI indices Turkey's NUTS-2 regions at the four-digit level for the years between 1980 and 2000. To investigate which variables determine industry concentration, systematic relation between the characteristics of the industry and industrial concentration is tested. Following the method proposed by Paluzie, Pons and Tirado, a panel regression equation is estimated, where the dependent variable is the Gini concentration index and the independent variables are the variables that represent the characteristics of the sectors that follow the predictions of classical trade theory, new trade theory and new economic geography. The major finding of the study is that during 1980–2000, Turkey's regions became more specialized and industry became more concentrated. Increases in the average values of regional specialization and industrial concentration support the prediction developed by Krugman hypothesis that regions become more specialized and industries become more concentrated with economic integration. In exploring the driving forces of industrial concentration, the findings demonstrate that firms tend to cluster in regions where there are economies of scale.     

A simultaneous equations model of migration and economic change in nonmetropolitan areas

A simultaneous equations model of migration and economic growth in nonmetropolitan regions of the United States is estimated using data for 1960-1970. The dependent variables considered include in-migration, out-migration, growth in employment, and growth in income. The findings indicate that there is a definite link between the patterns of economic and demographic change in nonmetropolitan areas but that it differs in important respects from that which has been observed in metropolitan areas.     

METROPOLITAN AND NON-METROPOLITAN POPULATION TRENDS IN CANADA, 1966–1982

This paper discusses broad population movements within and between metropolitan and nonmetropolitan regions in Canada during the recent past. It is based on an annual series of aggregate migration at the metropolitan level. Three complementary approaches are used in order to distill information from this vast array of interregional flows. The first is based on net migration. The second, disequilibrium analysis, is based on the difference between the observed population shares of regions and a set of calculated steady-state population shares which would result if the currently observed set of interregional migration rates remained constant. Both approaches indicate short-term effects of migration on the evolving pattern of regional growth and decline. The third approach, based on aggregate interregional flows, allows one to observe some changes in migration behaviour which are not made evident by the first two approaches.     

LOCAL INPUT AND PRODUCTIVITY GROWTH IN U.S. MANUFACTURING: 1972–2002*

ABSTRACT This research analyzes manufacturing growth and decline across metropolitan and nonmetropolitan regions during the 1972–2002 period. We decompose real value added growth across local labor market areas in the lower 48 U.S. states into contributions from labor, capital, and total factor productivity. We then estimate a model describing the long‐run growth of labor, capital, and productivity and find that increased productivity increases the growth of labor and capital, as well as a positive correlation between labor and capital stock growth. We also find evidence that human capital investment and agglomeration economies encourage productivity growth, while unionization discourages it.     

A NOTE ON THE DIFFERENTIAL REGIONAL EFFECTS OF INCOME INEQUALITY: EMPIRICAL EVIDENCE USING U.S. COUNTY‐LEVEL DATA

This note examines the correlation between income inequality and economic growth using a panel of income distribution data for 3,109 counties of the U.S. Using the System Generalized Method of Moments (GMM) approach, we find that for the entire sample of 3,109 counties, an increase in a county's level of inequality has a significant negative relationship with future economic growth. In reality, however, the magnitude, sign, and significance of this relationship is not necessarily uniform across all regions of the U.S., motivating the need to examine regional differentials in the relationship between inequality and growth. Consequently, we split our dataset into metropolitan and nonmetropolitan counties, into the eight Bureau of Economic Analysis regions, and into regions of different political affiliation and economic‐dependence typology. Our results show considerable heterogeneity in the relationship between inequality and growth across these regions.     

Leaves in the wind? Local policies of small and medium-sized towns in metropolitan regions

Small and medium-sized towns (SMSTs) contribute to the economic performance of whole metropolitan regions. However, the variety of factors that influence the economic development of SMSTs is understudied and the impact and relevance of their local policies are especially unclear. This article studies local policies of SMSTs within the metropolitan region of Zurich (Switzerland) and the impact of local policies on the economic specialization of these towns. Switzerland serves as an interesting context in which to study SMSTs, particularly those in metropolitan regions, due to their constant growth and the high local autonomy enjoyed by Swiss local governments. Using a multiple case study design that relies on a pair-wise comparison, we find that the economic specialization of SMSTs can mainly be explained by factors that are exogenous to local policy-making such as the town’s location and its connectivity. Land-use strategies are the only local policies that can influence the economic specialization of SMSTs. Therefore, SMSTs are well advised to invest in professionalized land-use departments and to coordinate their land-use strategies with neighbouring jurisdictions.     

INTRA-REGIONAL EMPLOYMENT GROWTH IN LUXEMBOURG (1994–2005)

The specialization of city-centres towards more advanced service activities has mostly been studied in the largest city-regions, the case of smaller urban centres being less well documented. In that context, the objective of this article is to analyse the role of sectoral and regional factors in employment growth in Luxembourg between 1994 and 2005. Using statistical data from the Luxembourg General Inspection of Social Security, this contribution distinguishes 12 categories of manufacturing industries and services according to an OECD-Eurostat knowledge-based classification. Five intra-regional areas are distinguished based on morphological and functional criteria in the Luxembourg Metropolitan Area. Using several indexes, this article first analyses the sectoral specialization and geographical concentration of employment. A model of intra-regional employment growth, initially developed by Marimon and Zilibotti and applied at the European level, is then shown to account for 40 per cent of employment growth. An estimation of the contributions of sectoral and geographical factors highlights the primacy of the latter over the former. Finally, the construction of virtual economies confirms the City's overall lower performance as compared to its close periphery. Results underscore a process of functional integration in the Luxembourg metropolitan area: as the core of the city undergoes a specialization process, the urban area benefits from a relocation of activities less sensitive to distance and transaction costs, while the periphery becomes increasingly diversified, notably in the South where traditional industrial activities are being replaced by service activities. These results suggest that the evolution pattern of employment growth in Luxembourg is very similar to that of some larger metropolitan centres, owing to its exceptional financial service activities.     

江苏沿江地区制造业同构状况及合意性评判

产业空间分工是产业分工在地域上的投影,强调不同地域的产业分工发展及相互关系。按照一般意义,产业地域专业化分工有利于集约利用资源、增强区域竞争力。而产业同构作为产业空间分工的现实问题,存在两面性,即合意与非合意的趋同。以江苏沿江21个市区、县(市)为样本,采用地区相对分工指数、地区间分工指数和地方专业化指数等方法,探析沿江地区产业空间分工趋势和同构程度。并基于合意与非合意产业同构的特征,从市场需求、发挥地区比较优势和环境效益等方面进一步分析江苏沿江地区产业同构的合意程度。     

The Location of Services in the Urban Hierarchy and the Regions of the United States

We use regression and factor analyses to explain intermetropolitan variation in the proportion of jobs in disaggregated service sectors in American metropolitan areas. Central place theory postulates of centrally located establishments serving a surrounding complementary region partially explain the positive relationship between metropolitan size and the proportion of jobs in an area in services. Regional variation in demand following several decades of substantial shifts in population and economic output is an additional influence. Intermetropolitan clustering of service sectors is also occurring. A factor analysis of employment proportions in twenty-two disaggregate service sectors identified five intersectoral service clusters. The factor analysis accounted for substantially more variance than the regression equations. We interpret this result as evidence of the emergence of service-based spatial industrial complexes. We argue that agglomeration of information-intensive intermediate services is driven by an attraction to labor markets endowed with pools of skilled professionals who can flexibly apply their talents in a variety of sectors. Unusual demographic characteristics of some metropolitan areas probably explain clusters of final demand services.     

School quality and rural in-migration: Can better rural schools attract new residents?

Studies in the nonmetropolitan population change literature have largely focused on the role of natural amenities and economic restructuring, but few have focused on the role of public services. This paper addresses the question of whether public services in nonmetropolitan counties, specifically the outcomes of public schools, could attract migrants. We use a Poisson regression technique little-used in the migration literature to control for push and pull factors driving migration patterns and control for school quality. Results show that better schools can draw migrants to nonmetropolitan areas. Marginal effects are larger for nonmetropolitan counties not adjacent to metropolitan areas.     

How does transportation shape intrametropolitan growth? An answer from the Regional Express Rail

This paper analyzes the influence of transportation infrastructure, and in particular of the Regional Express Rail (RER), on employment and population growth in the Paris metropolitan area between 1968 and 2010. In order to make proper causal inference, we rely on historical instruments and control for all other transportation modes that could be complement or substitute to the RER. Our results show that proximity to an RER station increases employment and population density and, in particular, employment and population growth. The latter effects are higher in municipalities located near RER stations and close to employment (sub)centers. They are also found to be particularly strong for jobs in the service sector, for factory workers, and for highly educated population. We find no impact of the RER expansion on employment growth during the first part of the period, while the effect on population growth appears earlier but declines over time.     

HUMAN CAPITAL LOCATION CHOICE: ACCOUNTING FOR AMENITIES AND THICK LABOR MARKETS*

ABSTRACT A growing literature has found a positive association between human capital and long‐run employment growth across cities. These studies have increased interest in understanding the location choices of university degree holders, a group often used as a proxy measure of human capital. Based on data from the 2001 Canadian Census of Population, this paper investigates determinants of the location choices of degree and nondegree holders. With a multinomial logit model, it tests a series of hypotheses about the differential effects of thick labor markets and amenities on the location choice of these groups across metropolitan and nonmetropolitan areas in Canada.     

Land Absorption in U.S. Metropolitan Areas: Estimates and Projections from Regional Adjustment Models

This article adapts a regional adjustment model to estimate and project the spatial outcome of population and employment growth in U.S. metropolitan areas. The three-equation multiplicative model of population change, employment change, and land absorption is estimated using three-stage least squares to account for endogeneity among the dependent variables and contemporaneous correlation across the system of equations. In addition to the core model, alternative specifications are estimated, imposing the initial conditions of size, land availability, and economic structure. The stability of the solutions is then examined using reduced-form equations estimated via the seemingly unrelated regression equations approach. The results reveal substantive evidence that population and employment growth are jointly determined, of how the two affect the outcome of land development, and, perhaps most importantly, stable and fractionally reasonable estimates at projected equilibrium points. Lastly, the adapted model controlling for the initial condition of land availability is used to project patterns of land consumption at equilibrium in 50 rapid-growth metropolitan areas.     

Are Spells of Unemployment Longer in Nonmetropolitan Areas? Nonparametric and Semiparametric Evidence

I use nonparametric and semiparametric proportional hazard models to examine whether individuals resident in nonmetropolitan areas experience lower per period rates of exit from unemployment following job loss than metropolitan area residents. Results show that between 1989 and 1993 per period cumulative rates of exit from unemployment were slightly higher in nonmetropolitan areas, mainly due to nonmetropolitan–metropolitan differences in individual characteristics and local economic conditions. Employment density is found to have a positive association with rates of exit of unemployment in metropolitan areas but not in nonmetropolitan areas.     

中国城市产业结构的专业化与多样化特征分析

当前,我国正处于调整经济结构、转变增长方式的关键时期,各地区都把调整优化产业结构作为地区经济发展的核心内容。客观深入的分析城市尺度上产业结构的专业化和多样化水平及其时序特征,找出决定产业结构的关键因素,对于各地区如何依据已有产业基础、要素禀赋、区位特征合理构建高效、可持续的城市经济结构,以及在国家层面如何协调区域发展都具有十分重要的意义。本文利用2003—2009年全国286个地级市除农林牧渔外其它18个产业的就业数据,分析了我国城市的专业化、多样化水平及其演变规律,以及产业结构与地区大小、人口规模和经济发展水平之间的关系。本文的研究结果对于目前我国各地区和城市合理确定产业结构调整的方向和策略,以及在国家层面如何更有效协调区域发展具有一定的指导意义。     

Anomalies in red and blue: Exceptionalism in American electoral geography

Red and Blue America has become the spatial metaphor for an electoral divide on two main dimensions – a nonmetropolitan Red and a larger metropolitan Blue, and a traditionalist Red and a more modern Blue. In this paper, we evaluate the validity and consistency of this conventional wisdom, using both the 2000 and 2004 presidential elections results by county. While previous research has underscored the overall pattern and its accuracy, we choose instead to explore mainly the anomalous results: “metropolitan” or “modern” areas that President Bush carried, and “nonmetropolitan” and “traditional” areas that Democrats won. We develop a typology of the anomalous counties and carry out a simple analysis of characteristics that help show how and why they are anomalous. We then compare the 2000 and 2004 results to discover anomalous areas, counties which switched parties or which became more or less partisan. Trends between 2000 and 2004 suggest a weakening of the metropolitan and nonmetropolitan dimension but a deepening of the cultural one, although we note as well that most of the electorate does not place itself at these partisan extremes. We relate these findings to longer term structural changes in American society, and to Republican strategies to mobilize insecure voters. Finally, we lay out an agenda to look at a sample of counties, using qualitative methods, in order to understand these anomalous results.     

THE EFFECTS OF TAXES,EXPENDITURES, AND PUBLIC INFRASTRUCTURE ON METROPOLITAN AREA EMPLOYMENT*

ABSTRACT. Data for 28 metropolitan areas over a 15-year period are used to determine the impacts of government spending, taxes, and public infrastructure on total employment and disaggregated employment. After carefully controlling for the government budget constraint we find that taxes are negatively related to total employment and education spending is positively related to total employment. Nevertheless, we find that it is difficult for metropolitan areas to influence the composition of their employment with government tax and expenditure policies. Moreover, at current levels of public infrastructure, marginal changes in infrastructure have no strong effect on employment.