Industrial agglomeration and spatial persistence of employment in software publishing

George Deltas (), Dakshina De Silva and Robert P. McComb

No 85393182, Working Papers from Lancaster University Management School, Economics Department

Abstract: We use geocoded administrative establishment data in Texas to estimate the effects of localization economies on the spatial persistence of industrial employment in the software industry. The choice of the software industry allows us to distinguish between the spatial persistence of employment due to human capital spillovers from that due to the labor pool channel. Unlike previous research, this analysis is independent of administrative boundaries. The results suggest that a location, defined as a 1-mile radius circle, with an initial concentration of software industry employment, retains a disproportionate number of employees 6 years later despite significant job turnover. Software industry employment in surrounding areas has small effects. The results are not driven by higher establishment growth rates in high concentration locations or by differences in survival probabilities. They are fully explained by: (i) the retention by other establishments in a location of jobs lost by an establishment in that location, and (ii) an increased propensity of software establishments to enter in or near locations with prior software establishment presence. The entry effect diminishes sharply beyond one mile. We demonstrate that these findings are most consistent with labor channel effects, although the presence of human capital spillovers cannot be fully excluded.

Keywords: agglomeration economies; labor pools; knowledge spillovers; firm growth (search for similar items in EconPapers)
JEL-codes: R12 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-geo and nep-ure
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