Economic geography

CEP Insights

Cities and regions

Economic prosperity is very unevenly distributed across space. What causes some places to be richer and some poorer? Why do these spatial disparities matter - and what can policy do to reduce them? Economists studying ur...Read more...

Blog

VoxEU:

Consumer city: evidence from smartphone data

Traditional theories emphasise production decisions and the commuting costs of workers in shaping the spatial concentration of economic activity in cities. However, much of urban travel is related to consumption of non-t...Read more...

CEP discussion paper

Dynamic spatial general equilibrium

We develop a dynamic spatial general equilibrium model with forward-looking investment and migration decisions. We characterize analytically the transition path of the spatial distribution of economic activity in respons...Read more...

Blog

What Works Centre for Local Economic Growth:

Reflections on struggling high streets

Henry Overman reflects on the findings from the What Works Centre's Recovery Workshop focusing on the British high street, looking at how an economic recovery from the pandemic focused on policy may best help our high st...Read more...

Blog

VoxEU:

State capacity and development clusters

The determinants of economic development have been debated for many years. However, some of these determinants have been hard to measure internationally. Tim Besley, Chris Dann and Torsten Persson review evidence from 25...Read more...

CentrePiece article

UK house prices in Covid-19 times

The pandemic lead to increased demand for bigger homes and gardens. With housing supply limited by strict UK planning regulations and the market propped up by a stamp duty waiver and the furlough scheme, prices of detach...Read more...

External publication

Pancakes to Pyramids: City Form to Promote Sustainable Growth (English)

Towns and cities are economic and social microcosms in which large numbers of people and firms interact. These interactions largely shape how a city looks, how it functions, and how it grows. But how exactly does this ma...Read more...

CEP discussion paper

Suburbanization in the United States 1970-2010

The second half of the twentieth century saw large-scale suburbanization in the United States, with the median share of residents who work in the same county where they live falling from 87 to 71 percent between 1970 and...Read more...

Blog

LSE Blogs:

Government urban regeneration initiative failed to improve Britain's most deprived areas

In 1994, John Major's Conservative government launched an initiative to improve a range of societal issues through regeneration. The Single Regeneration Budget ran for nearly a decade, but failed to create opportunities ...Read more...

Blog

VoxEU:

Why housing is built in flood-prone coastal areas

Despite the higher susceptibility to floods and a growing climate crisis, more than 10% of the world's population live in low-elevation coastal zones, and that percentage is growing. Yatang Lin, Thomas McDermott and Guy ...Read more...

Blog

LSE Blogs:

Why central London has seen the biggest rises in house prices, despite COVID

As many predicted, the pandemic led to a demand for bigger homes and gardens. But with supply limited by Britain's strict planning regulations, and the market propped up by a stamp duty waiver and the furlough scheme, pr...Read more...

Blog

Rebuilding Macroeconomics:

Understanding Educational Progression at the Local Level: Portsmouth, The Northern City on the South Coast

Understanding regional inequalities is likely to be key to understanding the UK's overall macroeconomic performance. In this article, Jo Blanden, Hector Espinoza, Sandra McNally and Guglielmo Ventura analyse the educatio...Read more...

Journal article

Journal of Urban Economics:

The impact of public employment: Evidence from Bonn

This paper evaluates the impact of changes in public employment on private sector activity using the creation of the new West German government in Bonn in the wake of the Second World War as a source of exogenous variati...Read more...

CentrePiece article

Lockdown and the social life of big cities

The effects of Covid-19 on the social lives of city dwellers - being able to go to the pub, restaurants and theatre - may be more relevant for the future of cities than its impact on work. That's the implication of a tho...Read more...

CentrePiece article

Will coronavirus cause a big city exodus?

Big cities thrive because of the economic and social benefits of proximity – but proximity also helps to spread Covid-19. Does this mean an end to the urban revival of recent years – or do vaccines herald a return to nor...Read more...

Blog

LSE US Centre:

Trade protection along supply chains: how antidumping measures against China hurt downstream industries

Production processes are often no longer confined to a single country; supply chains can be fragmented across great distances. By contrast, tariffs are often used by individual countries to protect certain industries. In...Read more...

CEP discussion paper

Quantifying the externalities of renewable energy plants using wellbeing data: The case of biogas

Although there is strong support for renewable energy plants, they are often met with local resistance. We quantify the externalities of renewable energy plants using well-being data. We focus on the example of biogas, o...Read more...

Blog

LSE Business Review:

Lockdown shows us it is not work that attracts us to big cities - but the social life

Covid-19's effect on the social lives of city dwellers - being able to meet at the pub, restaurants or theatre - may be more relevant for the future of cities than its impact on work, write Gabriel Ahlfeldt, Fabian Bald,...Read more...

CEP discussion paper

Quality of life in a dynamic spatial model

We develop a dynamic spatial model in which heterogeneous workers are imperfectly mobile and forward-looking and yet all structural fundamentals can be inverted without assuming that the economy is in a stationary spatia...Read more...

CEP discussion paper

Are bigger banks better? Firm-level evidence from Germany

The effects of large banks on the real economy are theoretically ambiguous and politically controversial. I identify quasi-exogenous increases in bank size in post-war Germany. I show that firms did not grow faster after...Read more...

CEP discussion paper

All aboard: the effects of port development

This paper examines the effects of port development on the economy. By using scarce local land intensively, ports put pressure on local land prices and crowd out other forms of economic activity. We use the introduction ...Read more...

Blog

VoxEU:

The impact of public employment: evidence from West Germany's post-war capital Bonn

Raising the level of public employment is a frequently used policy instrument to support economically lagging regions. This column evaluates the impact of changes in public employment on private sector activity using the...Read more...

Blog

LSE Business Review:

The use of designer reputation to build tall in London

Height exemptions are made easier when a world-famous architect is involved, but the process carries hidden costs, writes Paul Cheshire....Read more...

Blog

LSE British Politics and Policy:

Transport infrastructure expenditure: while there is no strong evidence of significant regional differences, the data available is problematic

The UK government uses a Value for Money framework to help allocate infrastructure expenditure. At the core of this is a benefit-to-cost ratio (BCR), calculated using a set of established monetised impacts and costs. Yet...Read more...

CEP discussion paper

Prime locations

We harness big data to detect prime locations - large clusters of knowledge-based tradable services - in 125 global cities and track changes in the within-city geography of prime service jobs over a century. Historically...Read more...

Blog

What works well centre for local economic growth:

Benefits, costs, and 'levelling up'

Henry Overman examines how transport infrastructure can play an important role in the economic performance of national and local economies. Reducing transport costs for businesses and commuters, improves access to market...Read more...

Blog

Economics Observatory:

Will coronavirus cause a big city exodus?

Big cities thrive because of the economic and social benefits of proximity - but proximity also helps to spread Covid-19. Does this mean an end to the big city revival of recent years? Much will depend on how quickly we ...Read more...

Journal article

Fiscal Studies:

Devolving skills: the case of the apprenticeship grant for employers

One rationale for devolution is that local decision makers may be well placed to adapt national policies to the local context. We test whether such adaptation helps meet programme objectives in the case of the Apprentice...Read more...

Journal article

Regional Science and Urban Economics:

The effects of supporting local business: evidence from the UK

This paper assesses the effects of a significant place-based intervention that targeted local businesses in deprived areas in the UK. To gain identification, we use data at a fine spatial scale and a regression discontin...Read more...

Journal article

World Bank Economic Review:

Migration and Urbanization in Post-Apartheid South Africa

Although Africa has experienced rapid urbanization in recent decades, little is known about the process of urbanization across the continent. This paper exploits a natural experiment, the abolition of South African pass ...Read more...

Journal article

Journal of Economic Perspectives:

Place-based policies and spatial disparities across European cities

Spatial disparities in income and worklessness across areas of the European Union are profound and persistent. Concerns about these disparities and the appropriate policy response are longstanding. Two trends have re-ene...Read more...

Journal article

Journal of Development Economics:

The Belt and Road Initiative: Reshaping economic geography in Central Asia?

This paper develops a computable spatial equilibrium model of Central Asia and uses it to analyze the possible effects of the Belt and Road Initiative on the economy of the region. The model captures international and su...Read more...

Journal article

The Quarterly Journal of Economics:

The making of the modern metropolis: evidence from London

Using newly constructed spatially disaggregated data for London from 1801 to 1921, we show that the invention of the steam railway led to the first large-scale separation of workplace and residence. We show that a class ...Read more...

Journal article

Journal of Urban Economics:

The role of demand in land re-development

Vacant, previously-developed land in cities can generate negative externalities on surrounding areas, and is often the target of policies to promote re-development. This paper provides estimates of the price sensitivity ...Read more...

Blog

CEP Urban and Spatial Programme Blog:

Housing: 'no shortage' - is it nonsense?

Paul Cheshire questions arguments that Britain is not suffering from a housing shortage, pointing out errors in common understanding....Read more...

Journal article

Journal of International Economics:

Geography, competition, and optimal multilateral trade policy

How should multilateral trade policy be designed in a world in which countries differ in terms of market access and technology, and firms with market power differ in terms of productivity? We answer this question in a mo...Read more...

Journal article

Journal of the European Economic Association:

Does additional spending help urban schools? An evaluation using boundary discontinuities

This study exploits spatial anomalies in school funding policy in England to provide new evidence on the impact of resources on student achievement in urban areas. Anomalies arise because the funding allocated to Local E...Read more...

CEP discussion paper

The making of the modern metropolis: evidence from London

Modern metropolitan areas involve large concentrations of economic activity and the transport of millions of people each day between their residence and workplace. We use the revolution in transport technology from the i...Read more...

Journal article

Journal of International Economics:

Market Potential and Global Growth over the Long Twentieth Century

We examine the evolution of market potential and its role in driving economic growth over the long twentieth century. Theoretically, we exploit a structural gravity model to derive a closed-form solution for a widely-use...Read more...

CEP discussion paper

Market potential and global growth over the long twentieth century

We examine the evolution of market potential and its role in driving economic growth over the long twentieth century. Theoretically, we exploit a structural gravity model to derive a closed-form solution for a widely-use...Read more...

SERC/Urban and Spatial Programme Discussion Paper

The Impact of Public Employment: Evidence from Bonn

This paper evaluates the impact of public employment on private sector activity using the relocation of the German federal government from Berlin to Bonn in the wake of the Second World War as a source of exogenous varia...Read more...

CEP discussion paper

Quantitative spatial economics

The observed uneven distribution of economic activity across space is influenced by variation in exogenous geographical characteristics and endogenous interactions between agents in goods and factor markets. Until recent...Read more...

Journal article

Econometrica:

The economics of density: evidence from the Berlin Wall

This paper develops a quantitative model of internal city structure that features agglomeration and dispersion forces and an arbitrary number of heterogeneous city blocks. The model remains tractable and amenable to empi...Read more...

Book

Urban Economics and Urban Policy
Challenging Conventional Policy Wisdom Hardcover

In this bold, exciting and readable volume, Paul Cheshire, Max Nathan and Henry Overman illustrate the insights that recent economic research brings to our understanding of cities, and the lessons for urban policy-making...Read more...

CentrePiece article

Can cities be trapped in bad locations?

After the fall of the Roman Empire, urban life in France became a shadow of its former self, but in Britain it completely disappeared. Guy Michaels and Ferdinand Rauch use these contrasting experiences as a natural exper...Read more...

CEP discussion paper

Resetting the Urban Network: 117-2012

Do locational fundamentals such as coastlines and rivers determine town locations, or can historical events trap towns in unfavourable locations for centuries? We examine the effects on town locations of the collapse of ...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Do Large Departments Make Academics More Productive? Agglomeration and Peer Effects in Research

We study the effect of a large set of department characteristics on individual publication records. We control for many individual time-varying characteristics, individual fixed-effects and reverse causality. Department ...Read more...

CEP discussion paper

The Economics of Density: Evidence from the Berlin Wall

This paper develops a quantitative model of city structure to separate agglomeration forces, dispersion forces and fundamentals as determinants of location choices. The model remains tractable and amenable to empirical a...Read more...

CEP discussion paper

Agglomeration, Trade and Selection

This paper studies how firm heterogeneity in terms of productivity affects the balance between agglomeration and dispersion forces in the presence of pecuniary externalities through a selection model of monopolistic comp...Read more...

CEP discussion paper

A Many-Country Model of Industrialization

We draw attention to the role of economic geography in explaining important cross-sectional facts which are difficult to account for in existing models of industrialization. By construction, closed-economy models that st...Read more...

SERC/Urban and Spatial Programme Discussion Paper

The Effects of Agglomeration on Wages: Evidence from the Micro-Level

This paper estimates individual wage equations in order to test two rival non-nested theories of economic agglomeration, namely New Economic Geography (NEG), as represented by the NEG wage equation and urban economic (UE...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Economic Geographers and the Limelight: The Reaction to the 2009 World Development Report

The reaction of economic geographers to the World Bank's World Development Report 2009 – Reshaping Economic Geography – has so far been a corporatist turf-protecting exercise. The report has been dismissed as the work of...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Self-Reinforcing Shocks: Evidence from a Resettlement Policy

i. A completely revised version of this paper is available as SERCDP0080, May 2011....Read more...

SERC/Urban and Spatial Programme Discussion Paper

Regional Manufacturing Wages: Dancing to the Tune of Trade Shocks

Firms generally choose to locate their production where profits are maximized. As costs affect profits, trade-offs between two marginal costs – employees’ wages and transport costs – may be important for decisions regard...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Predicting the Geography of House Prices

Prediction is difficult. In this paper we use panel data methods to make reasonably accurate shortterm ex-post predictions of house prices across 353 local authority areas in England. The issue of prediction over the lon...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Analysing the Impact of Public Capital Stock Using the NEG Wage Equation: A Panel Data Approach

This paper examines the relationship between the level of public infrastructure and the level of productivity using panel data for the Spanish provinces over the period 1984-2004, a period which is particularly relevant ...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Simulating Wages and House Prices Using the NEG

The paper incorporates house prices within an NEG framework leading to the spatial distributions of wages, prices and income. The model assumes that all expenditure goes to firms under a monopolistic competition market s...Read more...

CEP discussion paper

The Empirics of New Economic Geography

Although a rich and extensive body of theoretical research on new economic geography has emerged, empirical research remains comparatively less well developed. This paper reviews the existing empirical literature on the ...Read more...

CEP discussion paper

Economic Geography: A Review of the Theoretical and Empirical Literature

This paper reviews the new economic geography literature, which accounts for the uneven distribution of economic activity across space in terms of a combination of love of variety preferences, increasing returns to scale...Read more...

CEP discussion paper

Why Capital does not Migrate to the South: A New Economic Geography Perspective

This paper explains why capital does not flow from the North to the South - the Lucas Paradox - with a New Economic Geography model that incorporates mobile capital, immobile labour, and productively heterogeneous firms....Read more...

SERC/Urban and Spatial Programme Discussion Paper

Prediction Using Panel Data Regression with Spatial Random Effects

This paper considers some of the issues and difficulties relating to the use of spatial panel data regression in prediction, illustrated by the effects of mass immigration on wages and income levels in local authority ar...Read more...

CEP discussion paper

History and Industry Location: Evidence from German Airports

A central prediction of a large class of theoretical models is that industry location is not necessarily uniquely determined by fundamentals. In these models, historical accident or expectations determine which of severa...Read more...

CEP discussion paper

Economic Linkages Across Space

We develop a diagrammatic framework that can be used to study the economic linkages between regions or cities. Hitherto, such linkages have not been the primary focus of either the theoretical or empirical literatures. W...Read more...

CEP discussion paper

Firms in International Trade

Despite the fact that importing and exporting are extremely rare firm activities, economists generally devote little attention to the role of firms when discussing international trade. This paper summarizes key differenc...Read more...

CEP discussion paper

Shifts in Economic Geography and their Causes

This paper analyses some of the forces that are changing the spatial distribution of activity in the world economy. It draws on the 'new economic geography' literature to argue the importance of increasing returns to sca...Read more...

Journal article

The Quarterly Journal of Economics:

Causes of sprawl: a portrait from space

We study the extent to which US urban development is sprawling and what determines differences in sprawl across space. Using remote-sensing data to track the evolution of land use on a grid of 8.7 billion 30 x 30 metre c...Read more...

Journal article

The Review of Economic Studies:

Testing for localization using micro-geographic data

To study the detailed location patterns of industries, and particularly the tendency for industries to cluster relative to overall manufacturing, we develop distance-based tests of localization. In contrast to previous s...Read more...

CEP discussion paper

Agglomeration and the Adjustment of the Spatial Economy

We consider the literatures on urban systems and New Economic Geography to examine questions concerning agglomeration and how areas respond to shocks to the economic environment. We first propose a diagrammatic framework...Read more...

CEP discussion paper

The Costs of Remoteness: Evidence from German Division and Reunification

This paper exploits the division of Germany after the Second World War and the reunification of East and West Germany in 1990 as a natural experiment to provide evidence of the importance of market access for economic de...Read more...

Journal article

Journal of International Economics:

Economic geography and international inequality

This paper estimates a structural model of economic geography using cross-country data on per capita income, bilateral trade, and the relative price of manufacturing goods. We provide evidence that the geography of acces...Read more...

CEP discussion paper

The Geography of UK International Trade

This paper examines how the geography of UK international trade has changed since the UK¿s accession to the European Economic Community using a newly constructed data set that gives a detailed breakdown of the UK¿s impor...Read more...

CEP discussion paper

Trade Shocks and Industrial Location: the Impact of EEC Accession on the UK

This paper combines detailed production data (from the ARD) with international trade data by port to examine the impact of accession to the EEC on the location of UK manufacturing. The paper has two main objectives. The ...Read more...

CEP discussion paper

Can We Learn Anything from Economic Geography Proper?

Abstract This paper considers the ways geographers (proper) and (geographical) economists approach the study of economic geography. It argues that there are two areas where the approach of the latter is more robust than ...Read more...

CEP discussion paper

Distance, Skill Deepening and Development: Will Peripheral Countries Ever Get Rich?

This paper models the relationship between countries' distance from global economic activity, endogenous investments in education, and economic development. Firms in remote locations pay greater trade costs on both expo...Read more...

CEP discussion paper

Explaining Cross-Country Export Performance: International Linkages and Internal Geography

This paper investigates the determinants of countries' export performance looking in particular at the role of international product market linkages. We begin with a novel decomposition of the growth in countries' expo...Read more...

CEP discussion paper

Factor Price Equalization in the UK?

This paper develops a general test of factor price equalization that is robust to unobserved regional productivity differences, unobserved region- industry factor quality differences and variation in production technolog...Read more...

CEP discussion paper

Globalization in History: A Geographical Perspective

This paper argues that a geographical perspectie is fundamental to understanding comparative economic development in the context of globalization. Central to this view is the role of agglomeration in productivity perform...Read more...

Book

The Spatial Economy
Cities, Regions, and International Trade

The authors show how a common approach that emphasizes the three-way interaction among increasing returns, transportation costs, and the movement of productive factors can be applied to a wide range of issues in urba...Read more...

CEP discussion paper

Economic Geography and International Inequality

This paper estimates a structural model of economic geography using cross-country data on per capita income, bilateral trade, and the relative price of manufacturing goods. More than 70% of the variation in per capita in...Read more...

CEP discussion paper

Spatial Evolution of the US Urban System

We test implications of economic geography models for location, size and growth of cities with US Census data for 1900 û 1990. Our tests involve non-parametric estimations of stochastic kernels for the distributions of c...Read more...

CEP discussion paper

Internet Cluster Emergence

Internet development holds the promise of transmitting economic value across physical space at zero marginal cost. In such a 'weightless economy', what factors matter for the location of economic activity and thus for ...Read more...