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Night-Time Light Data: A Good Proxy Measure for Economic Activity?

  • Mellander, Charlotta

    ()

    (Jönköping International Business School)

  • Stolarick, Kevin

    ()

    (University of Toronto)

  • Matheson, Zara

    ()

    (University of Toronto)

  • Lobo, José

    ()

    (Arizona State University)

Research has suggested that night-time light (NTL) can be used as a proxy for a number of variables, including urbanization, density, and economic growth. But, just how close is the relationship between NTL and economic activity? This paper uses a combination of correlation analysis and geographically weighted regressions in order to examine the relationship between the two. We use fine-grained geo-coded micro-data for Swedish establishments and individuals, and match it with both radiance and saturated light emissions. We find that the correlation between NTL and economic activity is strong enough to make it a relatively good proxy for population and establishment density, but the correlation is weaker in relation to wages. In general, we find a stronger relation between light and density values, than with light and total values. We also find a closer connection between radiance light and economic activity, than with saturated light. Further, we find the link between light and economic activity, especially estimated by wages, to be slightly overestimated in large urban areas, and underestimated in rural areas.

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Paper provided by Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies in its series Working Paper Series in Economics and Institutions of Innovation with number 315.

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Length: 32 pages
Date of creation: 10 Jun 2013
Date of revision:
Handle: RePEc:hhs:cesisp:0315
Contact details of provider: Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden
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  1. Florida, Richard & Mellander, Charlotta & Gulden, Tim, 2010. "Global Metropolis - assessing economic activity in global centers based on nighttime satellite images," Working Paper Series in Economics and Institutions of Innovation 218, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  2. Florida, Richard & Gulden, Tim & Mellander, Charlotta, 2008. "The Rise of the Mega-Region," Working Paper Series in Economics and Institutions of Innovation 129, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  3. Vernon Henderson & Adam Storeygard & David N. Weil, 2011. "A Bright Idea for Measuring Economic Growth," American Economic Review, American Economic Association, vol. 101(3), pages 194-99, May.
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