Knowledge Shocks Diffusion and the Resilience of Regional Inequality

Alexandra Cermeño

No 96, Working Papers from European Historical Economics Society (EHES)

Abstract: This paper provides a simplified method of exploring the geographical limits of a knowledge shock over the long run. Using a geographically decomposable distanceweighed sum of world GDPs by county, differences in differences regression analysis shows that a new university will not only have a positive impact on the local economy, but also on the GDP of nearby counties. Furthermore, challenging the conventional wisdom that knowledge spillovers affect the local economy, this study provides evidence that the effect expands to the whole nation although its strength dilutes with distance. Consistent with the education literature, this investigation provides evidence that the shock will make the relative GDP of foreign competitors worse-off. Results are persistent in the long run, although the effect of time is also decreasing. Results are robust to potential endogeneity related to the self-selection of prosperous allocations for new academic institutions.

Keywords: New Economic Geography; Spillovers; U.S Counties (search for similar items in EconPapers)
JEL-codes: L8 N72 O18 R11 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2016-07
New Economics Papers: this item is included in nep-cse, nep-geo and nep-ure
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https://www.ehes.org/wp/EHES_96.pdf (application/pdf)

Related works:
Working Paper: Knowledge shocks diffusion and the resilience of regional inequality (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:hes:wpaper:0096

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