Henry G. Overman

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 overallmanufacturing, we develop distance-based tests of localisation. In contrast to previous studies, our approach allows us to assess the statistical significance of departures from randomness. In addition, we treat space as continuous instead of using an arbitrary collection of geographical units. This avoids problems relating to scale and borders. We apply these tests to an exhaustive UK data set. For four-digit industries, we find that (i) only 51% of them are localised at a 5% confidence level, (ii) localisation takes place mostly at small scales below 50 kilometres, (iii) the degree of localisation is very skewed, and (iv) industries follow broad sectoral patterns with respect to localisation. Depending on the industry, smaller establishments can be the main drivers of both localisation and dispersion. Three-digit sectors show similar patterns of localisation at small scales as well as a tendency to localise at medium scales.

Mostly Pointless Spatial Econometrics

We argue that identification problems bedevil most applied spatial research. Spatial econometrics solves these problems by deriving estimators assuming that functional forms are known and by using model comparison techniques to let the data choose between competing specifications. We argue that in most situations of interest this, at best, achieves only very weak identification. Worse, in most cases, such an approach will simply be uninformative about the economic processes at work rendering much applied spatial econometric research ‘pointless’, unless the main aim is simply description of the data. We advocate an alternative approach based on the ‘experimental paradigm’ which puts issues of identification and causality at centre stage.

Zipf's law for cities: an empirical examination

We use data for metro areas in the United States, from the US Census for 1900 - 1990, to test the validity of Zipfs Law for cities. Previous investigations are restricted to regressions of log size against log rank. In contrast, we use a nonparametric procedure to calculate local Zipf exponents from the mean and variance of city growth rates. This also allows us to test for the validity of Gibrats Law for city growth processes. Despite variation in growth rates as a function of city size, Gibrats Law does hold. In addition the local Zipf exponents are broadly consistent with Zipfs Law. Deviations from Zipfs Law are easily explained by deviations from Gibrats Law.

The spatial distribution of economic activities in the European Union

This Paper considers the spatial distribution of economic activities in the European Union. It has three main aims: (i) to describe the data that is available in the EU and give some idea of the rich spatial data sets that are fast becoming available at the national level; (ii) to present descriptive evidence on the location of aggregate activity and particular industries and to consider how these location patterns are changing over time; (iii) to consider the nature of the agglomeration and dispersion forces that determine these patterns and to contrast them to forces acting elsewhere, in particular the US. Our survey suggests that much has been achieved in the wave of empirical work that has occurred in the past decade, but that much work remains to be done.

Exploring the Detailed Location Patterns of UK Manufacturing Industries using Microgeographic Data

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Assessing the Effects of Local Taxation using Microgeographic Data

We study the impact of local taxation on the location and growth of firms. Our empirical methodology pairs establishments across jurisdictional boundaries to estimate the impact of taxation. Our approach improves on existing work as it corrects for unobserved establishment heterogeneity, for unobserved time-varying site specific effects, and for the endogeneity of local taxation. Applied to data for English manufacturing establishments we find that local taxation has a negative impact on employment growth, but no effect on entry.

Neighbourhood Effects in Large and Small Neighbourhoods

This paper uses data from a sample of Australian teenagers to test for neighbourhood effects on school dropout rates. The data allow us to test for neighbourhood effects at two different spatial scales. We find that the educational composition of the larger neighbourhood can influence the dropout rate. We argue that this is most likely to reflect the structure of local labour market demand. We also find that the low socioeconomic status of the immediate neighbourhood has an adverse impact on dropout rate. This suggests that government policy may need to consider the socioeconomic composition of quite small geographical areas if it considers interfering in the market to create greater income-mixing within neighbourhoods.

The Effect of Information and Communication Technologies on Urban Structure

Two innovations in the last century have changed dramatically the cost of communicating and transmitting information: The first is the widespread adoption of telephony; the second is the internet. We study the implications of these changes in ICT for urban structure. We find robust evidence that increases in the number of telephone lines per capita lead to a more concentrated distribution of city sizes and so correspondingly to more dispersion in the distribution of economic activity in space. The evidence on internet usage is more speculative, although it goes in the same direction. This empirical result is rationalized in a theoretical model.

Integration and Industrial Specialisation in the European Union

This paper analyses the industrial structure of the European Union. Our results show that from 1980 onwards, the industrial structures of EU economies have become increasingly dissimilar. In contrast, results for individual industries are more varied. Some industries have become more concentrated, while others have dispersed. Regression results suggest that both comparative advantage and economic geography forces are driving these changes. Despite these findings, a comparison with the US shows that EU industry remains less concentrated suggesting that there may be someway to go before the relocation process reaches its limit.

Urban Economics and Urban Policy

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. The authors present new evidence on the fundamental importance of cities to economic wellbeing and to the enrichment of our lives. They also argue that many policies have been trying to push water uphill and have done little to achieve their stated aims; or, worse, have had unintended and counterproductive consequences.