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Identifying the Sources of Local Productivity Growth

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Author Info
Federico Cingano () (Bank of Italy, Economic Research Department)
Fabiano Schivardi () (Bank of Italy, Economic Research Department)

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Abstract

Using firm-level based TFP indicators (as opposed to employment-based proxies) we estimate the effects of alternative sources of dynamic externalities at the local geographic level. Contrary to previous empirical work, we find that industrial specialization and scale indicators positively affect TFP growth at the city-industry level, while we do not find evidence that either the degree of local competition or productive variety impact on subsequent productivity growth. Employment-based regressions yield nearly the opposite results, in line with previous empirical work. We show that such regressions could suffer from serious identification problems when interpreted as evidence of dynamic externalities. This calls into question the conclusions of the existing literature on dynamic agglomeration economies.

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Paper provided by Bank of Italy, Economic Research Department in its series Temi di discussione (Economic working papers) with number 474.

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Date of creation: Jun 2003
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Handle: RePEc:bdi:wptemi:td_474_03

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Related research
Keywords: local growth; productivity; dynamic externalities;

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Find related papers by JEL classification:
R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes
O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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