We estimate the effect of opioid use rates on local economic resilience through changes in industrial composition. We find regional opioid use rates adversely affect firm growth in general, with the greatest impact on small firms. Our results are robust to several identification strategies (Difference in Differences, Propensity Score Matching, and Instrumental Variables) and alternative empirical specifications. Our findings establish that local industrial composition and long-term resilience are each adversely affected by the opioid public health crisis.
This paper aims to analyze the trends in income inequality in large cities within a selected sample of OECD countries. Specifically, we consider a set of individual characteristics that account for changes in the income distribution and estimate their contribution to differences in inequality in large cities over the last two decades. We use a combination of reweighting techniques and recentered influence functions (RIF) to detect an upward trend in inequality within large cities. This result is mainly driven by changes in the returns to endowments rather than by changes in its distribution. Our findings suggest that these results are not of the same magnitude across the countries analyzed. A key finding is that the contribution to inequality of the skill premium is considerably higher in North American countries than in European countries.
In this article, we analyze how industry- and region-specific characteristics influence individual-level decisions on mobility within and between regions during the life cycle of the industry. Using uniquely detailed panel-type data from the Finnish high technology sector, our analysis demonstrates that the influence of different regional features varies for different types of job changes and labor mobility and also according to the industry life cycle. We find that the classic agglomeration-type arguments regarding labor search and matching only really operate in the early growth stages of an industry life cycle. These patterns change throughout the various stages of the industry life cycle, although in quite different ways according to different factors, and understanding how these patterns change helps to provide a richer understanding of the labor market roles of agglomeration and clustering.
This study explored the impact of transportation systems in urban areas on economic activity. We examined the effect of traditional Chinese railway construction fencing on urban spatial development using nighttime luminance and railway data from prefecture-level cities. The study found that the fencing effect exacerbated uneven development on either side of the railway, especially in economically underdeveloped areas. These results were supported by different measures of development and a placebo test. The fencing effect was also found to affect the location of newly registered firms and the total factor productivity of industrial firms, leading to unbalanced growth on either side of the railway.
The Chinese government has been using water efficiency targets to manage commercial, institutional, and industrial water use across the country. This paper argues that water efficiency targets may influence provincial administrators’ preferences in tightening water regulation in cities with higher water use while disproportionately overregulating water use in productive cities to satisfy their efficiency goals. I develop a city-level production model with water regulation preferences and show that the unintended distortion of water regulation in response to water efficiency targets leads to efficiency loss of resource allocation and further reshapes regional output across cities, especially for productive cities. Using a sample of city-level water data from 2006 to 2016 in China, this paper empirically investigates the impact of the Three Red Lines (TRL) policy on provincial administrators’ preferences in water use regulation. The results indicate that the elasticity of water regulation in response to the policy is approximately −0.64 to −0.8 and has resulted in tighter water regulations for cities with higher economic outputs. Quantitatively, eliminating water distortions would reshape water use across cities and increase the aggregate output of an entire province by up to 0.069%. The results imply that possible consequences of the political consideration of provincial administrators in satisfying water efficiency targets include inefficiency and inequality in water allocation.
This paper investigates the role of municipal and provincial public social spending for local income inequality after taxes and transfers in Austria. We utilize a spatial multi-level model, which allows us to analyze the contribution of three spatial scales (municipal, district, and provincial level) to municipal income inequality. Our analysis shows that the effect of public social spending on local Gini indices does not only differ across provinces but also across municipalities which indicates that the potential cushioning effect of social expenditure is highly localized. Further splitting total public social expenditure into three distinct categories (education, health, social protection) reveals that spending on social protection has the highest effect on local inequality across all provinces, while health spending does not exert a discernible influence in any province. The method and results presented in this paper are of international interest for policymakers and researchers who aim to investigate whether the same patterns hold true in other countries.