Agglomeration economies with consistent productivity estimates

Philipp Ehrl

Regional Science and Urban Economics, 2013, vol. 43, issue 5, 751-763

Abstract: This paper investigates the relative impact of microeconomic agglomeration mechanisms on plant's total factor productivity (TFP) using German establishment and employment-level data. Contrasting different strategies for estimating TFP from plant-level production functions reveals that unobserved output prices bias true productivity and lead to underestimated agglomeration economies. With the corrected TFP measure, the largest impact is found for labor market pooling, which is captured by the correlation of the occupational composition between one county-industry and the rest of the county. This main result is robust, even when the spatial units are resized from counties to larger labor market regions. Input linkages appear to be relevant only at this larger regional scale. Overall, agglomeration economies differ substantially across industries. Only for a subset of industries, some positive evidence is detected for knowledge spillovers.

Keywords: Agglomeration economies; Modifiable areal unit problem; TFP estimation; Price bias (search for similar items in EconPapers)
JEL-codes: D24 R11 R30 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (38)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0166046213000562
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Agglomeration economies with consistent productivity estimates (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:43:y:2013:i:5:p:751-763

DOI: 10.1016/j.regsciurbeco.2013.06.002

Access Statistics for this article

Regional Science and Urban Economics is currently edited by D.P McMillen and Y. Zenou

More articles in Regional Science and Urban Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu (repec@elsevier.com).