Using functional economic regions to model endogenous regional performance in Australia: implications for addressing the spatial autocorrelation problem

Abstract

A new geography of functional economic regions (FERs) has been created for Australia using a methodology that optimizes within‐region self‐containment of commuting to jobs. The paper tests whether this FER geography might overcome the spatial autocorrelation problem encountered when using de jure regions such as local government areas (LGAs). The empirical context for the analysis is an investigation of potential factors that might explain spatial variability in the endogenous regional employment performance over the decade 1996–2006. Resumen. Mediante el uso de una metodología que optimiza la auto‐suficiencia intrarregional en el desplazamiento al trabajo, se ha creado para Australia una nueva geografía de regiones económicas funcionales (FERs, siglas en inglés). El artículo comprueba si esta geografía de FER podría superar el problema de la autocorrelación espacial encontrado al utilizar regiones de derecho tales como áreas de gobierno local (AGL). El contexto empírico del análisis es una investigación de los factores potenciales que pudieran explicar la variabilidad espacial en el desempeño en cuanto a empleo regional endógeno en la década de 1996–2006.

The population change, migration patterns and economic dynamics of Australia’s regional urban centres

“…This analysis assumes that there is a strong regional dependency between some urban centres and their hinterlands, but not others. Regional studies often analyse spatial dependency by spatial lag-in other words, the circumstances of a region are correlated to those of the adjoining or nearby regions (Stimson, Mitchell et al 2011a). Minimising the spatial lag between regions, or maximising the spatial lag within regions, provides a geography for analysis that reduces the impact of arbitrary boundaries on the outcomes, such as local government areas.…”

Worker intra‐urban residential migration and spatial labour market change in Melbourne's functional economic regions

“…Using FERs to construct labour market boundaries is preferable to use of de jure boundaries, as economic relationships often cross boundaries between local areas (R. J. Stimson et al, 2011). A common approach of FER analysis is to use the journey to work (JTW) data, 1 SA2 is the second smallest spatial unit in Australian census statistics defined in ASGC, and it is the smallest spatial unit to represent internal migration flow data.…”

“…FERs have been used internationally (Dijkstra et al, 2019) and in Australia (R. J. Stimson et al, 2011) to depict spatial economic activity and relationships at the regional Next, a modularity analysis, a form of network structure analysis (Fragkiskos & Michalis, 2013), is applied to identify SA2s where high levels of commuting interactions concentrate and form a 'local community' in the spatial network. The network communities are then optimised via a sequential sorting procedure that allows nodes shifting within the spatial network to find their closest possible communities based on shared JTW flow structures.…”

“…In this study, we offer an advance on previous Australian FER studies (e.g., R. J. Stimson et al, 2011) by creating a new set of FERs for Melbourne using an improved method. This method allows the creation of FERs as derived geographies through which to evaluate how worker migration flows intersect with the structure of the sub-metropolitan economy.…”

Agglomeration Economies and the Urban Wage Premium in Australia

“…Consistent with this notion, Stimson, Mitchell, Rohde, and Shyy (2011) and Stimson, Flanagan, Mitchell, Shyy, and Baum (2018) use relational data of commuting flows to define regional areas with a strong commuting connectivity within each area and argue that the issue of spatial autocorrelation is more limited than is the case for using pre-defined administrative spatial structures. Thus, spatial autocorrelation may be more limited for the defined spatial units than the ABS structures if the spatial units defined by flowbca based on commuting flows are more self-contained.…”