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Economies of Density and Productivity in Service Industries: An Analysis of Personal Service Industries Based on Establishment-Level Data

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  • Masayuki Morikawa

    (Research Institute of Economy, Trade and Industry)

Abstract

This study aims to empirically investigate the determinants of service industry productivity, such as economies of scale and economies of density. By using establishment-level data related to personal service industries in Japan, the study estimates the production functions for both value-added and physical output measures. In almost all the service industries examined, significant economies of scale and economies of density are observed, wherein productivity increases by 7%% to 15%% when the municipality population density doubles. These findings are confirmed by an estimation in which the measures of physical output are considered instead of value added. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal The Review of Economics and Statistics.

Volume (Year): 93 (2011)
Issue (Month): 1 (February)
Pages: 179-192

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Handle: RePEc:tpr:restat:v:93:y:2011:i:1:p:179-192

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  1. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March.
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  7. Tsutomu Miyagawa & Yukie Sakuragawa & Miho Takizawa, 2005. "Productivity and the Business Cycle in Japan -Evidence from Japanese Industry Data -," Discussion papers 05022, Research Institute of Economy, Trade and Industry (RIETI).
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  10. Chad Syverson, 2001. "Market Structure and Productivity: A Concrete Example," Working Papers 01-06, Center for Economic Studies, U.S. Census Bureau.
  11. Chad Syverson, 2004. "Prices, Spatial Competition, and Heterogeneous Producers: An Empirical Test," Working Papers 04-16, Center for Economic Studies, U.S. Census Bureau.
  12. Kanemoto, Yoshitsugu & Ohkawara, Toru & Suzuki, Tsutomu, 1996. "Agglomeration Economies and a Test for Optimal City Sizes in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 10(4), pages 379-398, December.
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Citations

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Cited by:
  1. Morikawa, Masayuki, 2012. "Demand fluctuations and productivity of service industries," Economics Letters, Elsevier, vol. 117(1), pages 256-258.
  2. Tanaka, Kiyoyasu & Hashiguchi, Yoshihiro, 2012. "Spatial spillovers from FDI agglomeration : evidence from the Yangtze River Delta in China," IDE Discussion Papers 354, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  3. MORIKAWA Masayuki, 2010. "Economies of Scale and Hospital Productivity: An empirical analysis of medical area level panel data," Discussion papers 10050, Research Institute of Economy, Trade and Industry (RIETI).
  4. Hashiguchi, Yoshihiro & Tanaka, Kiyoyasu, 2013. "Agglomeration and firm-level productivity : a Bayesian spatial approach," IDE Discussion Papers 403, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  5. MORIKAWA Masayuki, 2011. "Urban Density, Human Capital, and Productivity: An empirical analysis using wage data," Discussion papers 11060, Research Institute of Economy, Trade and Industry (RIETI).

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