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Local Border Reforms and Economic Activity

Author

Listed:
  • Peter H. Egger
  • Marko Köthenbürger
  • Gabriel Loumeau

Abstract

In this paper, we study how local border reforms affect economic activity. To do so, we make use of large-scale municipal merger reforms in Germany to assess the effect of local border changes on the distribution of activity in space, an issue that has not been addressed in existing literature. To allow for a comparison of economic activity within unique geographical units over time, we use geo-coded light data as well as local land-use data. Adopting a difference-in-differences approach, we find evidence that municipalities absorbing their merger partners and hosting the new administrative center experience a significant increase in local activity, while the municipalities that are being absorbed and are losing the administrative center experience a decrease in such activity. The difference between the gains in activity from absorbing municipalities and the losses from absorbed ones appears positive. These hitherto undocumented results point to the importance of distance to the administrative center as a determinant of the spatial distribution of economic activity.

Suggested Citation

  • Peter H. Egger & Marko Köthenbürger & Gabriel Loumeau, 2017. "Local Border Reforms and Economic Activity," CESifo Working Paper Series 6738, CESifo.
  • Handle: RePEc:ces:ceswps:_6738
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp6738.pdf
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    References listed on IDEAS

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    Cited by:

    1. Baskaran, Thushyanthan & Blesse, Sebastian, 2019. "Subnational border reforms and economic development in Africa," ZEW Discussion Papers 18-027, ZEW - Leibniz Centre for European Economic Research.

    More about this item

    Keywords

    border effects; centripetal forces; nightlight data; administrative center; municipal mergers;

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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