This paper argues that the spatial scope of agglomeration economies is more complex than is often assumed in the literature. We provide insight into this issue by showing that agglomeration on short ...distances (<5 km) does not significantly affect wages, whereas it has a significant and positive effect on medium distances (5–10 km). This effect attenuates rapidly across geographic space, becoming insignificant after 40–80 km. We offer several explanations for this observed distance decay pattern. The results do not imply, however, that nearby agglomeration is irrelevant to the wage formation: only highly urbanized areas benefit from agglomeration on longer distances. Furthermore, this article finds no evidence that foreign economic mass affects wages in the Netherlands, which suggests that national borders are still a substantial barrier for economic interaction.
This paper exploits a quasi-experiment to value the benefits of reducing urban traffic externalities. As a source of exogenous variation we use the opening of a new bypass in The Hague, the ...Netherlands that reduced traffic on a number of local streets, leaving others unaffected. We make use of a unique longitudinal dataset on traffic densities and residential sales, and calculate the effect of the change in traffic nuisance on housing prices. We find that, on average, a reduction of 50% in traffic density induces a 1.4% increase in housing prices. Reductions in traffic nuisance are valued much more positively when the traffic density is already high. Furthermore, our results indicate that traffic nuisance effects are likely to be biased in cross-sectional studies.
•We produce new and improved evidence on the valuation of urban traffic externalities.•We combine a quasi-experiment and a fixed effect hedonic price estimation.•A 50% lower traffic density induces a 1.4% increase in housing prices on average.•When traffic density is already high, reductions in nuisance are valued more positively.•Cross-sectional studies likely yield biased estimates of traffic nuisance valuation.
Foreign direct investment (FDI) in services is often more important to supply foreign markets than cross-border trade. A complete analysis of services liberalization therefore requires the modelling ...of FDI. This paper presents the treatment of FDI in our CGE model WorldScan based on the ideas of Petri Petri, P.A., 1997. Foreign direct investment in a computable general equilibrium framework. Paper Prepared for the Conference, Making APEC work: Economic Challenges and Policy Alternatives, March 13–14. Keio University, Tokyo and Markusen Markusen, J.R., 2002. Multinational Firms and The Theory of International Trade. MIT Press that firms which establish affiliates abroad also transfer firm-specific knowledge. Consequently, capital owned by suppliers from home and foreign countries are not perfect substitutes. We apply this model to the proposals of the European Commission to open up services markets. Even when FDI in services could increase by 20% to 35%, the overall economic impact is limited. Our assessment suggests that GDP in the EU25 could increase up to 0.4%. These effects could be up to 0.8% higher if foreign capital also increases the overall productivity of the services sector.
We explore the economic implications of Croatia's possible accession to the European Union. We focus on two main changes associated with EU membership: accession to the internal European market and ...institutional reforms in Croatia triggered by EU membership. Consumption per capita in Croatia is estimated to rise by 2.6 percent as a result of accession to the internal market. In particular, the textile and wearing apparel sectors expand. If Croatia successfully reforms its domestic institutions in response to EU membership, income levels in Croatia could increase even more. Tentative estimates suggest that gross domestic product per capita in Croatia could rise by an additional 8 percent. Overall, the macroeconomic implications for the existing EU countries are negligible.
Flood prevention policy is of crucial importance to the Netherlands. We assess economical optimal flood prevention where multiple barrier dams and dikes protect the hinterland against sea level rise ...and peak river discharges. Current optimal flood prevention methods only consider dike rings with no dependencies between dikes. We propose a graph-based model for a cost-benefit analysis to determine optimal dike heights with multiple dependencies between dikes and barrier dams. Our model provides great flexibility towards the modelling of flood probabilities, damage costs and investments cost. Moreover, our model is easy to implement and can be solved quickly to proven optimality. Our model is developed for and applied to important policy decisions in the Netherlands for the Lake IJssel and Lake Marken region. Two barrier dams together with the dikes surrounding these two lakes protect a large part of the Netherlands. The area contains 17 dike ring areas, including the City of Amsterdam. Our model and application shows the importance of taking into account dependencies between dikes and barrier dams. The results of our model were used for major Dutch flood protection policy decisions, i.e. the decision how to control the water levels in Lake IJssel and Lake Marken and what economic efficient flood protection standards apply to barrier dams and dikes. Dependencies between barrier dams and dike rings have a large impact on economically optimal flood standards. On the basis of our model, the Dutch government has decided not to increase the water level of Lake IJssel with up to 1,5 meter. This saved both the current landscape around Lake IJssel and billions of euros in coming decades.
The existence of an urban wage growth premium is a well-established empirical fact. This article challenges the conventional view that faster wage growth for urban workers is caused by human capital ...spillovers. Instead, we find that the positive association between city size and individual wage growth is to a large extent driven by sorting of workers and firms, with inherently higher wage growth, into bigger cities. Having controlled for spatial sorting, we conclude that only young workers experience significant urban wage growth benefits. Wage level benefits of urban areas are important to all types of workers, especially the highly educated.
This article argues that the spatial scope of agglomeration economies is much more complex than is often assumed in the agglomeration literature. We provide insight into this issue by analyzing panel ...data on individual wages with a high level of spatial detail. The results show that agglomeration on short distances (<5 km) does not significantly affect wages, whereas it has a significant and positive effect on medium distances (5-10 km). This effect attenuates rapidly across geographic space, becoming insignificant after 40-80 km. These results, however, do not imply that nearby agglomeration is irrelevant for productivity. Regions must meet a critical threshold of nearby agglomeration in order to benefit from agglomeration on further distances. Furthermore, this article finds no evidence that foreign economic mass affects wages in the Netherlands, which suggests that national borders are still a substantial barrier for economic interaction. This article is a revised version of a paper published in February 2017. The original version of the article can be found here .
We consider a fundamental integer programming (IP) model for cost-benefit analysis flood protection through dike building in the Netherlands, due to Verweij and Zwaneveld. Experimental analysis with ...data for the Ijsselmeer lead to integral optimal solution of the linear programming relaxation of the IP model. This naturally led to the question of integrality of the polytope associated with the IP model. In this paper we first give a negative answer to this question by establishing non-integrality of the polytope. Second, we establish natural conditions that guarantee the linear programming relaxation of the IP model to be integral. We then test the most recent data on flood probabilities, damage and investment costs of the IJsselmeer for these conditions. Third, we show that the IP model can be solved in polynomial time when the number of dike segments, or the number of feasible barrier heights, are constant.
Optimal dike heights are of crucial importance to the Netherlands as almost 60% of its surface is under threat of flooding from sea, lakes, or rivers. This area is protected by more than 3,500 ...kilometres of dunes and dikes. These dunes and dikes require substantial yearly investments of more than 1 billion euro. In this paper we propose an integer programming model for a cost-benefit analysis to determine optimal dike heights. We improve upon the model proposed by Brekelmans et al. (2012), which is in turn an improvement of the model by Van Dantzig (1956). The model by Van Dantzig (1956) was introduced after a devastating flood in the Netherlands in 1953. Our model provides an alternative approach with almost complete flexibility towards input-parameters for flood probabilities, damage costs and investment costs for dike heightening. In contrast to Brekelmans et al. (2012), who present a dedicated approach with no optimality guarantee, we present an easy-to-implement algorithm that provides an optimal solution to the problem. We briefly discuss robust optimization approaches to deal with uncertainty, e.g. climate change. The method has been implemented and tested for the most recent data on flood probabilities, damage and investment costs, which are presently being used by the government to determine how the safety standards in the Dutch Water Act should be changed.
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