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Simulating Confidence for the Ellison-Glaeser Index

Andrew Cassey () and Ben Smith ()
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Ben Smith: School of Economic Sciences, Washington State University

No 2012-8, Working Papers from School of Economic Sciences, Washington State University

Abstract: The Ellison-Glaeser (1997) index is an unbiased statistic of industrial localization. Though the expected value of the index is known, ad hoc values are used to interpret the extent of localization. We improve on the interpretation of the index by simulating con dence intervals while varying the underlying parameters of the lognormal distribution of plant employment size and the number of plants in the industry. In the data, we nd cases whose index value is above the ad hoc threshold that are not statistically signi cant. We nd many cases below the ad hoc threshold that are statistically signi cant.

Keywords: Ellison-Glaeser; localization; herfindahl; simulation; confidence interval (search for similar items in EconPapers)
JEL-codes: C63 L11 R14 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2012-10
New Economics Papers: this item is included in nep-geo and nep-ure
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Journal Article: Simulating confidence for the Ellison–Glaeser index (2014) Downloads
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