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Productivity and earnings at the firm-plant level: the case of Lombardy’s urban and non-urban agglomerations

Eleonora Bartoloni and Maurizio Baussola ()

Spatial Economic Analysis, 2021, vol. 16, issue 3, 333-354

Abstract: We analyse business performance by using a unique data set of the universe of Italian local business units. We investigate the pattern of both productivity and profitability by adopting a decomposition technique to document spatial variation across urban and non-urban areas. Aggregate evidence indicates that an urban–non-urban productivity divide exists, but this premium vanishes with respect to profitability. Plant-level estimations using a hierarchical linear model show that area attractiveness positively affects productivity, whereas diseconomies of agglomeration negatively affect profitability. Coping with agglomeration costs is a priority for regional policies to transfer the productivity gains in urban areas into new investment and growth opportunities.

Date: 2021
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DOI: 10.1080/17421772.2020.1854480

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Handle: RePEc:taf:specan:v:16:y:2021:i:3:p:333-354