ABSTRACT This paper studies the impact of extreme heat on the housing market in 26 Chinese cities by analyzing more than 1.5 million second‐hand housing transaction records. Empirical results from hedonic regressions show that extreme heat significantly decreases housing prices and transaction volumes. This negative effect is concentrated in warm seasons and is substantially stronger for high‐end apartments, top‐floor units, and units in high‐rise buildings. Green spaces and water bodies are effective in mitigating the negative effect of extreme heat on the housing market. Mechanism analysis demonstrates that extreme heat significantly decreases the number of on‐site property visits before a transaction. These findings underscore the important influence of climate change on the housing market.

ABSTRACT This paper studies the long‐term effects of the Yugoslav civil war (1987–1995) on subnational economic growth across 78 regions in five former Yugoslav republics from 1950 to 2015. We construct counterfactual growth trajectories using a robust region‐level donor pool from 32 conflict‐free countries. Applying a hybrid synthetic control and difference‐in‐differences approach, we find that the civil war inflicted significant regional per capita GDP losses estimated at 38 percent relative to the synthetic counterfactual, with substantial regional heterogeneity. The most war‐affected regions suffered prolonged and permanent economic declines, while north‐western regions and capital cities experienced more transitory effects. Population displacement, ethnic fractionalization and polarization, and economic geography help explain cross‐regional variation in GDP losses. Our results are robust to extensive variety of specification tests, placebo analyses, and falsification exercises.

ABSTRACT This study examines the effect of factor market segmentation and its interaction with regional innovation activities in an imperfect institutional environment. We use the price method to measure the degree of factor market segmentation in 279 prefecture‐level cities in China from 1999 to 2019 and construct a spatial weight matrix of factor flow to analyze the relationship between factor market segmentation and regional innovation performance. We find that under the decentralization system, local governments implement factor market segmentation strategies without sacrificing local innovation performance. They compete for innovation and exhibit spatial and temporal heterogeneity. These characteristics also apply to innovation peripheral cities, which take the dominant position. A mechanism test reveals that factor market segmentation strategies adopted by larger markets have a greater negative impact on innovation performance in other regions. In contrast, the level of local innovation performance is positively influenced by the number of local laborers, which can be reduced by such strategies when they hinder labor inflow. By providing more systematic evidence from an imperfect institutional environment, this study deepens the understanding of local protection behavior and innovation activities, and has policy implications for promoting regional innovation performance.

ABSTRACTThis paper explores the relationship between market access and human capital in the context of an industrializing economy, in this case Spain between the late 19th and early 20th centuries. Specifically, we examine whether differences in regional accumulations of human capital could be related to market access. To do this, we empirically test the relationship between education variables and market access for Spanish provinces between 1860 and 1930. We then focus on the mechanism that may be mediating this relationship, that is, the skill premium. The results suggest that there were sizeable provincial differences in the skill premium, the explanation for which would be that those provinces with the highest market access specialized more in skill‐intensive sectors in which higher wages were paid.

ABSTRACT In the context of China's dynamic economic landscape, our research investigates the influence of traffic convenience (TC) on the proliferation of startup companies (SCs) across diverse geographic regions and industries. Utilizing panel data covering the period from 2000 to 2019 and encompassing 278 cities, we constructed a specialized data set for SCs in China using a text‐based machine learning approach and employed highway density to measure TC. Our analysis reveals that a marginal increase of 1 m of highway per square kilometer is associated with an average increase of approximately 18 SCs, primarily concentrated in the tertiary sector. Further exploration into the channels underlying TC's impact on SC formation uncovers significant channel effects of foreign direct investment, regional product sales, and market potential. Moreover, the emergence of high‐speed rail is also found to positively correlate with an increase in SC numbers. Our study identifies spatial and industrial disparities in the influence of TC, notably observing an insignificant effect on SCs in the northwestern and southern regions. Importantly, highway infrastructure improvements exert a lasting positive impact on startup formation, with effects remaining significant for up to 3 years. These findings contribute to the advancement of enterprise growth theory and shed light on the intricate relationship between transportation infrastructure and the enterprise ecosystem, providing valuable insights for policymakers and stakeholders engaged in urban planning and regional economic development initiatives.

ABSTRACT Recent geopolitical conflicts in Europe and the Middle East, coupled with a geopoliticization of trade, triggered the transition toward a new trade policy, moving away from managing interdependencies to managing dependency through economic security principles, embracing Open Strategic Autonomy . While a New Normal Trade Policy may be fundamental in restoring the European level playing field in international trade, it will not be exempt from costs that will affect regions differently, as geoeconomic fragmentation may significantly hurt low‐income regions, negatively affecting living standards. In this paper, we assess the regional income distribution of the New Normal Trade Policy scenario, through MASST5 model simulations. The model simulates GDP growth rates at NUTS2 level for all EU member countries + UK under the assumptions of the new trade policy. Simulations are based on a combination of internally coherent assumptions formalizing the EU's approach to the New Normal Trade Policy, mostly dealing with the risk diversification of trade partners in industries deemed strategic by the EU, with the extra investment in digital technologies, and with a reduction in within EU trade barriers. Estimated gains are spatially heterogeneous. Regions growing fastest include noncapital urban areas, Western European regions, manufacturing regions, and regions with strong institutions. Growth drivers differ, with high‐level functions boosting Western regions, while Eastern regions focus on production‐related ones. Between‐country disparities increase, yet within‐country inequalities tend to grow less due to the advantages of nonmanufacturing areas in Western countries; overall these trends would lead to a slowdown in territorial inequalities.

ABSTRACT Place‐based policies can change the spatial distribution of retail stores and consumers. We develop a general equilibrium model in which consumers make a single shopping trip and freely choose where to reside. By using this model, we evaluate the welfare impacts of place‐based policies for downtown retail agglomeration to clarify what place‐based policies are efficient. Results show that the efficiency of place‐based policies depends on the recipients of government subsidies, consumers or stores, even if the policies promote retail agglomeration in downtown areas. Using a utility function with the constant elasticity of substitution (CES) subutility for varieties, we examine the welfare impacts of these place‐based policies. We demonstrate that subsidizing consumers to relocate near downtown areas is inevitably harmful from the viewpoint of welfare under the CES, whereas subsidizing retail stores is efficient.

ABSTRACTWe employ sequence analysis to explore the heterogenous labor market paths of entrepreneurial Iraqi immigrants in Sweden, a group of forced migrants whom we follow from their year of immigration (2006–2009) to 2019. Using both individual and geographic characteristics, our main objective is to analyze how neighborhood characteristics are associated with individuals’ likelihood of following self‐sufficient labor market paths, leading to an income large enough to support themselves. The results show that residing among self‐employed co‐ethnics is positively related to the engagement in own self‐employment, while we find a negative relationship between neighborhood poverty and the likelihood of pursuing a labor market path leading to self‐sufficiency. A novel finding is that having self‐employed Iraqi neighbors is primarily associated with necessity entrepreneurs, who experience relatively long periods of non‐self‐sufficiency and limited participation in the regular labor market. As expected, the results show that highly educated and skilled individuals are more likely to follow self‐sufficient labor market paths. Our findings thus encourage efforts to mitigate socioeconomic disadvantages, support necessity entrepreneurs, and enhance education levels in disadvantaged groups.

ABSTRACTDoes knowledge complexity facilitate the upgrading of industrial structures? The paper analyses whether greater knowledge complexity promotes industrial structure upgrading from the three dimensions: complex knowledge accumulation, creation and diffusion. We emphasize that the local accumulation and creation of complex knowledge can promote innovation agglomeration, characterized by frequent innovation activity and high‐tech industry concentration, leading to structural upgrading. Furthermore, the diffusion of complex knowledge among regions bridges regional differences and produces spatial spillover effects on structural upgrading. We chose China, a developing country, as our research setting, and used Chinese patent data to measure the knowledge complexity of 281 cities in China from 2004 to 2016 to verify the theoretical hypotheses. Our findings demonstrate that developing countries can follow a new path toward industrial structure upgrading by strengthening the innovation agglomeration effect of complex knowledge.