The dynamics of local employment in France

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

Research Unit Working Papers from Laboratoire d'Economie Appliquee, INRA

Abstract: We study the impact of local economic structure on employment dynamics. Local employment is decomposed into the product of the average plant size and the number of plants in the area and industry. We estimate the dynamics of both components simultaneously using French yearly data on 36 industries and 341 areas between 1984 and 1993. The careful specification of short-run dynamics and the control for fixed effects and endogeneity are shown to be critical in the empirical model. First, static externalities are prevalent compared to dynamic ones. Moreover, whereas area-and-industry effects explain most of the spatial variation of plant size, the local number of plants is mainly driven by the current local economic structure. Policies targeted towards plant creation should thus be more efficient. For instance, large areas endowed with a small number of even size industries have both more and larger plants. A large number of plants heterogenous in size also increases the average plant size, but the number of plants is higher when plants have similar size.

Keywords: labor market; panel data; economic geography; employment. (search for similar items in EconPapers)
JEL-codes: C33 J21 J23 R23 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2004-02
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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 (2003)
Working Paper: The Dynamics of Local Employment in France (2003)
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