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Sectoral Agglomeration Economies in a Panel of European Regions

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  • Brülhart, Marius
  • Mathys, Nicole Andréa

Abstract

We estimate agglomeration economies, defined as the effect of density on labour productivity in European regions. The analysis of Ciccone (2002) is extended in two main ways. First, we use dynamic panel estimation techniques (system GMM), thus offering an alternative methodological treatment of the inherent endogeneity problem. Second, the sector dimension in the data allows for disaggregated estimation. Our results confirm the presence of significant agglomeration effects at the aggregate level, with an estimated long-run elasticity of 13 percent. Repeated cross-section regressions suggest that the strength of agglomeration effects has increased over time. At the sector level, the dominant pattern is of cross-sector "urbanisation" economies and own-sector congestion diseconomies. A notable exception is financial services, for which we find strong positive productivity effects from own-sector density.

Suggested Citation

  • Brülhart, Marius & Mathys, Nicole Andréa, 2007. "Sectoral Agglomeration Economies in a Panel of European Regions," CEPR Discussion Papers 6410, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:6410
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    More about this item

    Keywords

    Dynamic panel gmm; Employment density; European regions; Productivity;
    All these keywords.

    JEL classification:

    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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