The Dynamics of Local Employment in France

Thierry Magnac, Pierre-Philippe Combes and Jean-Marc Robin

No 3912, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This Paper studies the impact of local economic structure on local sectoral employment growth. Local employment growth is decomposed into ?internal? growth (the growth of the size of existing plants) and ?external? growth (the creation of new plants). Using panel data methods, we estimate the dynamics of both variables simultaneously. Our observations refer to 36 manufacturing, trade and service sectors and 341 French ?Employment Areas? in every year between 1984 and 1993. Carefully specifying the short-run dynamics and controlling for fixed effects and endogeneity are proved to be critical devices. The low order of the selected model, an ARMA (1,1), implies that static externalities are prevalent compared to dynamic ones. Moreover, whereas fixed effects explain most of the spatial variation of plant size, plant creation is mainly determined by the current local economic structure. Policies targeted on the creation of new plants should therefore prove to be more rapidly efficient. For instance, large areas endowed with a small number of even size sectors and large leader firms transferring growth to smaller numerous plants experience larger growth.

Keywords: Economic geography; Employment; Panel data; Local labour markets (search for similar items in EconPapers)
JEL-codes: C33 D40 L23 R11 (search for similar items in EconPapers)
Date: 2003-05
New Economics Papers: this item is included in nep-ent and nep-geo
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: The dynamics of local employment in France (2004)
Working Paper: The dynamics of local employment in France (2004)
Working Paper: The dynamics of local employment in France (2004)
Working Paper: The Dynamics of Local Employment in France (2004)
Working Paper: The dynamics of local employment in France (2004)
Working Paper: The Dynamics of Local Employment in France (2003)
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