Spatial agglomeration and productivity in Italy: a panel smooth transition regression approach

Giulio Cainelli, Andrea Fracasso and Giuseppe Vittucci Marzetti

No 1204, Openloc Working Papers from Public policies and local development

Abstract: The paper analyzes the impact of localization, urbanization and competition on firm-level TFP, using a large sample of Italian firm-level data from 1999 to 2007. In particular, the paper explores the nonlinearities of such effects, accounting for the possible presence of critical masses and/or congestion effects. We adopt a panel smooth transition regression model, so that the TFP elasticities are free to vary smoothly across two or more extreme values. Results show that localization economies and Jacobian externalities materialize only for values of, respectively, intra-industry spatial agglomeration and extra-sectoral local diversity above a certain threshold. Data instead shows no evidence of significant diseconomies. As for competition, we find a positive impact of local competition on productivity, even though such impact shrinks at high levels of competition.

Keywords: Agglomeration economies; Spatial concentration; Nonlinear panel; Smooth Transition Regression; Total Factor Productivity (search for similar items in EconPapers)
JEL-codes: C23 C24 D24 R12 R15 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (7)

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Journal Article: Spatial agglomeration and productivity in Italy: A panel smooth transition regression approach (2015)
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