Commentary on "Urban colossus: why is New York America's largest city?"

This article is commentary on a paper presented at a conference organized by the Federal Reserve Bank of New York in April 2005, "Urban Dynamics in New York City." The goal of the conference was threefold: to examine the historical transformations of the engine-of-growth industries in New York and distill the main determinants of the city's historical dominance as well as the challenges to its continued success; to study the nature and evolution of immigration flows into New York; and to analyze recent trends in a range of socioeconomic outcomes, both for the general population and recent immigrants more specifically.Economic conditions - New York (N.Y.) ; Federal Reserve District, 2nd ; Urban economics

Urban and regional dynamics in Poland

In this exploration of urban and regional dynamics in Poland after the transition, the authors find that the degree of urbanization, and primacy remains low in Poland. The largest cities are not growing at the rate that would be expected if post-transition adjustments were operating freely. As a result, Poland is not fully realizing external economies from urban agglomeration. Internal migration decreased significantly in the 1990s, with rural-to-urban migration declining dramatically. Current population levels everywhere seem frozen at a degree of urbanization that is low by international standards. Migration levels do not respond to unemployment differentials, perhaps because Poland's continuing housing shortage, deters migration. Housing construction, which was already low, fell by half in the 1990s, and has only recently begun a slight recovery. A significant number of mostly young, and educated temporary migrants leave Poland annually, many to find employment abroad. This may reduce pressure on the Polish labor market, but also keeps dynamic actors our of the domestic labor force, reducing growth in urban businesses and industry. Employment in manufacturing and agriculture is relatively concentrated, but specialization seems to have declined in recent years, perhaps reflecting barriers to labor mobility - which could limit growth. That employment in the manufacturing sector is quite concentrated, is to be expected in a formerly planned economy. But employment in the service sector, is also quite concentrated. A geographic divergence of service activities is not explained by dominant growth in specialized financial, and business services in the capital alone. Poland's policymakers should find a way to provide housing, thereby reducing barriers to labor mobility, and growth.Health Monitoring&Evaluation,Municipal Financial Management,Housing&Human Habitats,Public Health Promotion,Banks&Banking Reform,National Urban Development Policies&Strategies,Urban Housing and Land Settlements,Municipal Financial Management,Health Monitoring&Evaluation,Housing&Human Habitats

Effects of Air Quality Regulation on in Polluting Industries

This paper examines unintended effects of air quality regulation on decisions of major polluters, using plant data for 1963 to 1992. A key regulatory tool since 1978 is the annual designation of county air quality attainment status, where non-attainment status triggers specific equipment requirements for" new and existing plants. We find, in the later years of regulation, that, ceteris paribus, non-attainment status reduces expected births in polluting industries by 40-50%, resulting in a shift of polluting activity to cleaner, less populated attainment areas. Starting in the 1970s effects appear first for industries with bigger plant sizes and then, within industries, first for corporate plants relative to the much smaller non-affiliate, or single plant firm sector. In all industries, non-affiliates face less regulation than the bigger corporate plants, resulting in a permanent shift away from corporate plant production in some industries. Older plants benefit from grandfathering provisions greatly enhancing survival probabilities. Finally, the negotiation and permitting process under regulation appears to induce much greater up-front investments by new plants, so that, in non-attainment areas, regulation induces 50-100% increases in initial plant sizes compared to attainment areas. But for plants over 10 years of age there are no size differences.

"Sick of Local Government Corruption? Vote Islamic"

Indonesia has a tradition of corruption among local officials who harass and collect bribes from firms. Corruption flourished in the Suharto, pre-democracy era. This paper asks whether local democratization that occurred after Suharto reduced corruption and whether specific local politics, over and above the effects of local culture, affect corruption. We have a firm level data set for 2001 that benchmarks bribing activity and harassment at the time when Indonesia decentralized key responsibilities to local democratically elected governments. We have a second data set for 2004 on corruption at the end of the first democratic election cycle. We find that, overall, corruption declines between these time periods. But specific politics matter. Islamic parties in Indonesia are perceived as being anti-corruption. Our data show voting patterns reflect this belief and voters' perceptions have some degree of accuracy. In the first democratic election, localities that voted in legislatures dominated by secular parties, including Megawati's party, experienced significant relative increases in corruption, while the reverse was the case for those voting in Islamic parties. But in the second election in 2004, in those localities where corruption had increased under secular party rule, voters "threw the bums out of office" and voted in Islamic parties.

Where do manufacturing firms locate their headquarters?

Firms’ headquarters [HQ] support their production activity, by gathering information and outsourcing business services, as well as, managing, evaluating, and coordinating internal firm activities. In search of a better location for these functions, firms often separate the HQ function physically from their production facilities and construct stand-alone HQs. By locating its HQ in a large, service oriented metro area away from its production facilities, a firm may be better able to out-source service functions in that local metro market and also to gather information about market conditions for their products. However if the firm locates the HQ away from its production activity, that increases the coordination costs in managing plant activities. In this paper we empirically analyze the trade-off of these two considerations.Corporations - Headquarters ; Industrial location ; Manufactures

Corruption in Indonesia

Bribes by firms in Indonesia arise principally from regulations --licenses and levies --imposed by local government officials. Regulations generate direct revenues (fees) plus indirect revenues in the form of bribes. The expected value of the latter is capitalized into lower salaries needed by localities to compensate public officials. Localities in Indonesia are hampered by insufficient revenues from formal tax and transfer sources to pay competitive salaries plus fund demanded' levels of public services, because local tax rates are capped by the center and inter-governmental transfers are limited. Thus the direct and indirect revenues from local regulations are critical to local finances. The paper models and estimates the key aspects of corruption -- the relationship between bribes, time spent with local officials, and different forms of regulation. It models how inter-jurisdictional competition for firms limits the extent of local regulation and how greater sources of tax or inter-governmental revenues reduce the need for regulation and corruption. The paper estimates a large reduction in regulation in better funded localities. The findings are directly relevant to Indonesia where corruption is high and the country is in the throes of major decentralization and local democratization efforts.

Measuring Economic Growth from Outer Space

GDP growth is often measured poorly for countries and rarely measured at all for cities. We propose a readily available proxy: satellite data on lights at night. Our statistical framework uses light growth to supplement existing income growth measures. The framework is applied to countries with the lowest quality income data, resulting in estimates of growth that differ substantially from established estimates. We then consider a longstanding debate: do increases in local agricultural productivity increase city incomes? For African cities, we find that exogenous agricultural productivity shocks (high rainfall years) have substantial effects on local urban economic activity.economic growth; remote sensing; urbanization; income measurement

Aid, social capital and village public goods: after the tsunami.

Using survey data on fishermen and fishing villages in Aceh, Indonesia from 2005 and 2007, this paper examines the effect of the December 2004 tsunami and resulting massive aid effort on local public good provision, in particular on public labor inputs, but also public capital choices. Also analyzed are the roles of and changes in local social and political institutions and participation in political and social activities. Such an examination informs not only our understanding of the impacts of aid on villages, but also our understanding of how villages allocate resources to public goods. For public labor inputs, volunteerism is lower in villages with more aid projects, but that is offset if the dominant donor mitigates agency problems by doing its own implementation. Volunteerism is lower in villages with more 'democratic' activity such as elections, although that effect is mitigated in villages with higher levels of social capital pre-tsunami. Evidence suggests volunteerism is lower not because of changes in types of leaders with village elections per se, but rather due to heightened internal divisions associated with elections. Correspondingly for public capital, villages with more democratic activity combined with more aid projects tend to emphasize garnering private aid (e.g., houses) at the expense of public aid (e.g., public buildings).Aid, Volunteer, Public Goods.

Marshall's Economies

This paper estimates the nature and magnitude of the local externalities from own industry scale, as envisioned by Marshall. Census panel data on individual plants in high-tech and machinery industries across up to 487 countries are utilized, to quantify the direct effects of local external environment on plant productivity. Careful attention is paid to endogeneity issues in estimation. Magnitudes of scale externalities for corporate versus single plant firms are estimated and the sources of externalities (employment, numbers of plants, numbers of births, etc.) and extent (within the county versus extending to the rest of the MSA) are investigated. The paper asks in addition whether externalities are static or dynamic, a key issue in thinking about urban growth and industrial mobility; and whether they are dependent just on local own industry activity or also on overall local urban scale and/or diversity, a key issue in analyzing industrial composition and development of cities. The paper relates the findings on externalities for different industries to the extent of agglomeration and the degree of mobility of those industries across cities.