Advanced Search
MyIDEAS: Login

Spatial panel data estimation, counterfactual predictions, and local economic resilience among British towns in the Victorian era

Contents:

Author Info

  • Fingleton, Bernard
  • Palombi, Silvia

Abstract

We explore the relative ability of local economies to retain their long-run growth dynamics when faced by the destabilizing effects of major shocks. Taking annual wage series for nineteen U.K. towns over the historical period 1871–1906, we fit a spatial panel data model to 1871–1890 data and use estimated coefficients to obtain counterfactual predictions of wage levels after the 1890 shock to the end of the post-shock period. This allows us to analyze how actual wages in different towns performed in relation to their counterfactual paths, and to assess their relative resilience to the 1890 and subsequent crises. The key conclusion is that the sectoral composition of local employment is important for economic resilience; our evidence suggests that towns with excessive and increasing specialization in one dominant industry are relatively prone to shocks, because they lack the structural flexibility needed to replace declining sectors with productive and competitive activities, whereas economies with a diversified industrial mix have more scope for restructuring and renewal, and thus are more able to adapt to and tolerate shocks.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sciencedirect.com/science/article/pii/S0166046213000434
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 43 (2013)
Issue (Month): 4 ()
Pages: 649-660

as in new window
Handle: RePEc:eee:regeco:v:43:y:2013:i:4:p:649-660

Contact details of provider:
Web page: http://www.elsevier.com/locate/regec

Related research

Keywords: Economic resilience; Panel data; Spatial econometrics; Prediction; Counterfactual analysis;

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Simonetta Longhi & Peter Nijkamp & Jacques Poot, 2004. "Spatial Heterogeneity and the Wage Curve Revisited," ERSA conference papers ersa04p115, European Regional Science Association.
  2. Bernard Fingleton, 2008. "A Generalized Method of Moments Estimator for a Spatial Panel Model with an Endogenous Spatial Lag and Spatial Moving Average Errors," Spatial Economic Analysis, Taylor & Francis Journals, vol. 3(1), pages 27-44.
  3. Cross, Rod, 1993. "On the Foundations of Hysteresis in Economic Systems," Economics and Philosophy, Cambridge University Press, vol. 9(01), pages 53-74, April.
  4. Baltagi, Badi H. & Bresson, Georges & Pirotte, Alain, 2009. "Forecasting with Spatial Panel Data," IZA Discussion Papers 4242, Institute for the Study of Labor (IZA).
  5. Ron Martin, 2012. "Regional economic resilience, hysteresis and recessionary shocks," Journal of Economic Geography, Oxford University Press, vol. 12(1), pages 1-32, January.
  6. Cross, R. & McNamara, H. & Pokrovskii, A.V., 2010. "Memory of Recessions," SIRE Discussion Papers 2010-40, Scottish Institute for Research in Economics (SIRE).
  7. Blanchflower, David G. & Oswald, Andrew J., 2005. "The Wage Curve Reloaded," IZA Discussion Papers 1665, Institute for the Study of Labor (IZA).
  8. Peter Nijkamp & Jacques Poot, 2002. "The Last Word on the Wage Curve?," Tinbergen Institute Discussion Papers 02-029/3, Tinbergen Institute, revised 13 Mar 2003.
  9. David G. Blanchflower & Andrew J. Oswald, 1989. "The Wage Curve," NBER Working Papers 3181, National Bureau of Economic Research, Inc.
    • Blanchflower, D. & Oswald, A., 1989. "The Wage Curve," Papers 340, London School of Economics - Centre for Labour Economics.
  10. Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, vol. 99(394), pages 116-31, March.
  11. Baltagi, Badi H. & Blien, Uwe & Wolf, Katja, 2008. "New Evidence on the Dynamic Wage Curve for Western Germany: 1980–2004," IZA Discussion Papers 3433, Institute for the Study of Labor (IZA).
  12. Duranton, Gilles & Puga, Diego, 2000. "Nursery Cities: Urban Diversity, Process Innovation, and the Life-Cycle of Products," CEPR Discussion Papers 2376, C.E.P.R. Discussion Papers.
  13. Harry H. Kelejian & Ingmar R. Prucha, 2008. "Specification and Estimation of Spatial Autoregressive Models with Autoregressive and Heteroskedastic Disturbances," CESifo Working Paper Series 2448, CESifo Group Munich.
  14. B Bell & Stephen Nickell & Glenda Quintini, 2000. "Wage Equations, Wage Curves and All That," CEP Discussion Papers dp0472, Centre for Economic Performance, LSE.
  15. David, Paul A, 1985. "Clio and the Economics of QWERTY," American Economic Review, American Economic Association, vol. 75(2), pages 332-37, May.
  16. Bernard Fingleton & Julie Le Gallo, 2008. "Estimating spatial models with endogenous variables, a spatial lag and spatially dependent disturbances: Finite sample properties," Papers in Regional Science, Wiley Blackwell, vol. 87(3), pages 319-339, 08.
  17. Ron Martin & Peter Sunley, 2006. "Path dependence and regional economic evolution," Journal of Economic Geography, Oxford University Press, vol. 6(4), pages 395-437, August.
  18. Luisa Corrado & Bernard Fingleton, 2011. "Where is the Economics in Spatial Econometrics?," Working Papers 1101, University of Strathclyde Business School, Department of Economics.
  19. Baltagi, Badi H. & Blien, Uwe, 1998. "The German wage curve: evidence from the IAB employment sample," Economics Letters, Elsevier, vol. 61(2), pages 135-142, November.
  20. Bernard Fingleton, 2010. "Predicting the Geography of House Prices," SERC Discussion Papers 0045, Spatial Economics Research Centre, LSE.
  21. Michael J. Artis & Ernest Miguelez & Rosina Moreno, 2012. "Agglomeration economies and regional intangible assets: an empirical investigation," Journal of Economic Geography, Oxford University Press, vol. 12(6), pages 1167-1189, November.
  22. David Card, 1995. "The Wage Curve: A Review," Working Papers 722, Princeton University, Department of Economics, Industrial Relations Section..
  23. Badi H. Baltagi & Dong Li, 2006. "Prediction in the Panel Data Model with Spatial Correlation: The Case of Liquor," Center for Policy Research Working Papers 84, Center for Policy Research, Maxwell School, Syracuse University.
  24. Peter Kennedy, 2003. "A Guide to Econometrics, 5th Edition," MIT Press Books, The MIT Press, edition 5, volume 1, number 026261183x, December.
  25. Mark D. Partridge, 2005. "Does Income Distribution Affect U.S. State Economic Growth?," Journal of Regional Science, Wiley Blackwell, vol. 45(2), pages 363-394.
  26. Baltagi, Badi H. & Song, Seuck Heun & Koh, Won, 2003. "Testing panel data regression models with spatial error correlation," Journal of Econometrics, Elsevier, vol. 117(1), pages 123-150, November.
  27. Blanchflower, David G & Oswald, Andrew J, 1994. "Estimating a Wage Curve for Britain: 1973-90," Economic Journal, Royal Economic Society, vol. 104(426), pages 1025-43, September.
  28. repec:edn:sirdps:172 is not listed on IDEAS
  29. Bernard Fingleton & Harry Garretsen & Ron Martin, 2012. "Recessionary Shocks And Regional Employment: Evidence On The Resilience Of U.K. Regions," Journal of Regional Science, Wiley Blackwell, vol. 52(1), pages 109-133, 02.
  30. Kapoor, Mudit & Kelejian, Harry H. & Prucha, Ingmar R., 2007. "Panel data models with spatially correlated error components," Journal of Econometrics, Elsevier, vol. 140(1), pages 97-130, September.
  31. Bernard FINGLETON & Julie LE GALLO, 2007. "Finite Sample Properties of Estimators of Spatial Models with Autoregressive, or Moving Average, Disturbances and System Feedback," Annales d'Economie et de Statistique, ENSAE, issue 87-88, pages 39-62.
  32. Kelejian, Harry H & Prucha, Ingmar R, 1998. "A Generalized Spatial Two-Stage Least Squares Procedure for Estimating a Spatial Autoregressive Model with Autoregressive Disturbances," The Journal of Real Estate Finance and Economics, Springer, vol. 17(1), pages 99-121, July.
  33. David G. Blanchflower & Andrew J. Oswald, 1995. "An Introduction to the Wage Curve," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 153-167, Summer.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eee:regeco:v:43:y:2013:i:4:p:649-660. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.