Firm productivity, wages, and agglomeration externalities
AbstractThis paper investigates the existence of local externalities in manufacturing. In contrast to many other studies that focus on aggregate employment growth, we examine the effect of externalities occur through both productivity and wage effects, returns to specialisation are strong and large in magnitude. In accordance with the views of Marshall, Arrow and Romer, the net effect of competition have higher revenues and pay lower wages. Competition tends to lower wages, however, probably because of thick labor market externalities. We also find some limited evidence in favour of the diversity argument put forth by Jacobs.
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Bibliographic InfoPaper provided by Centre for the Study of African Economies, University of Oxford in its series CSAE Working Paper Series with number 2004-32.
Date of creation: 2004
Date of revision:
Other versions of this item:
- Marcel Fafchamps & Said El Hamine, 2004. "Firm Productivity, Wages, and Agglomeration Externalities," Economics Series Working Papers WPS/2004-32, University of Oxford, Department of Economics.
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