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The effect of agglomeration on the productivity of urban manufacturing sectors in a leading emerging economy

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  • Azari, Mehdi
  • Kim, Hakkon
  • Kim, Jun Yeup
  • Ryu, Doojin

Abstract

This study investigates the effect of agglomeration on urban labor productivity in the manufacturing sector of Korea, a leading emerging economy. We expand upon the production density model of Ciccone and Hall (1996) by employing Ke’s (2010) indicators, including variables for the labor density and manufacturing output density of the urban economy. To measure spatial spillover and labor pooling effects, we use the control variables of intra-city labor movement and the number of employees in each manufacturing sector who graduated from local higher educational institutions. The research is based on a panel data analysis of 200 Korean cities during the five-year period from 2004 to 2008. We find that urban labor productivity is determined by traditional inputs of agglomeration economies. While labor density has a negative effect on urban labor productivity, output density has a positive impact on urban manufacturing productivity.

Suggested Citation

  • Azari, Mehdi & Kim, Hakkon & Kim, Jun Yeup & Ryu, Doojin, 2016. "The effect of agglomeration on the productivity of urban manufacturing sectors in a leading emerging economy," Economic Systems, Elsevier, vol. 40(3), pages 422-432.
    • Handle: RePEc:eee:ecosys:v:40:y:2016:i:3:p:422-432
    DOI: 10.1016/j.ecosys.2015.08.005
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    References listed on IDEAS

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    Cited by:

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    2. Zahra Dehghan Shabani & Rouhollah Shahnazi, 2017. "The Short and Long Run Causality between Agglomeration and Productivity," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 21(2), pages 363-385, Spring.
    3. Zhou, Qian & Shao, Qinglong & Zhang, Xiaoling & Chen, Jie, 2020. "Do housing prices promote total factor productivity? Evidence from spatial panel data models in explaining the mediating role of population density," Land Use Policy, Elsevier, vol. 91(C).
    4. Wei Han & Ying Zhang & Jianming Cai & Enpu Ma, 2019. "Does Urban Industrial Agglomeration Lead to the Improvement of Land Use Efficiency in China? An Empirical Study from a Spatial Perspective," Sustainability, MDPI, vol. 11(4), pages 1-22, February.
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    6. Paavo Monkkonen & Jorge Montejano & Erick Guerra & Camilo Caudillo, 2020. "Compact cities and economic productivity in Mexico," Urban Studies, Urban Studies Journal Limited, vol. 57(10), pages 2080-2097, August.

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    More about this item

    Keywords

    Agglomeration effects; Output and labor density; Urban productivity;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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