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Agglomeration Spillovers and Persistence: New Evidence from Large Plant Openings

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  • Carlianne Patrick
  • Mark Partridge

Abstract

We use confidential Census microdata to compare outcomes for plants in counties that “win” a new plant to plants in similar counties that did not to receive the new plant, providing empirical evidence on the economic theories used to justify local industrial policies. We find little evidence that the average highly incentivized large plant generates significant productivity spillovers. Our semiparametric estimates of the overall local agglomeration function indicate that residual TFP is linear for the range of “agglomeration” densities most frequently observed, suggesting local economic shocks do not push local economies to a new higher equilibrium. Examining changes twenty years after the new plant entrant, we find some evidence of persistent, positive increases in winning county-manufacturing shares that are not driven by establishment births.

Suggested Citation

  • Carlianne Patrick & Mark Partridge, 2022. "Agglomeration Spillovers and Persistence: New Evidence from Large Plant Openings," Working Papers 22-21, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:22-21
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    File URL: https://www2.census.gov/ces/wp/2022/CES-WP-22-21.pdf
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    More about this item

    Keywords

    local economic development; agglomeration externalities; persistence;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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