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Agglomeration Elasticities in New Zealand

David Maré () and Daniel Graham ()

No 09_06, Working Papers from Motu Economic and Public Policy Research

Abstract: This paper analyses the relationship between firms’ multi-factor productivity and the effective employment density of the areas where they operate. Quantifying these agglomeration elasticities is of central importance in the evaluation of the wider economic benefits of transport investments. We estimate agglomeration elasticities using the Statistics New Zealand prototype Longitudinal Business Database: a firm-level panel covering the period 1999 to 2006. We estimate that an area with 10 percent higher effective density has firms with productivity that is 0.69 percent higher, once we control for the industry specific production functions and sorting of more productive firms across industries and locations. We present separate estimates of agglomeration elasticities for specific industries and regions, and examine the interaction of agglomeration with capital, labour, and other inputs.

Keywords: Agglomeration; urban density; transport evaluation; productivity (search for similar items in EconPapers)
JEL-codes: L25 R12 R3 R40 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2009-06
New Economics Papers: this item is included in nep-geo and nep-ure
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