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Multilevel Approaches and the Firm-Agglomeration Ambiguity in Economic Growth Studies

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Author Info

  • Frank G. van Oort

    (Utrecht University)

  • Martijn J. Burger

    (Erasmus University Rotterdam)

  • Joris Knoben

    (Tilburg University)

  • Otto Raspe

    (Netherlands Environmental Assessment Agency)

Abstract

See also the publication in 'Journal of Economic Surveys' , 26(3), 468-91. Empirical studies in spatial economics have shown that agglomeration economies may be a source of the uneven distribution of economic activities and economic growth across cities and regions. Both localization and urbanization economies are hypothesized to foster agglomeration and growth, but recent meta-analyses of this burgeoning body of empirical research show that the results are ambiguous. Recent overviews show that this ambiguity is fuelled by measurement issues and heterogeneity in terms of scale of time and space, aggregation, growth definitions, and the functional form of the models applied. Alternatively, in this paper, we argue that ambiguity may be due to a lack of research on firm-level performance in agglomerations. This research is necessary because the theories that underlie agglomeration economies are microeconomic in nature. Hierarchical or multilevel modeling, which allows micro levels and macro levels to be modeled simultaneously, is becoming an increasingly common practice in the social sciences. As illustrated by detailed Dutch data on firm-level productivity, employment growth and firm survival, we argue that these approaches are also suitable for reducing the ambiguity surrounding the agglomeration-firm performance relationship and for addressing spatial, sectoral and cross-level heterogeneity.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 12-014/3.

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Date of creation: 16 Feb 2012
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Handle: RePEc:dgr:uvatin:20120014

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Keywords: agglomeration economies; micro-macro link; multilevel analysis; productivity;

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Cited by:
  1. Matthias Duschl & Antje Schimke & Thomas Brenner & Dennis Luxen, 2014. "Firm Growth and the Spatial Impact of Geolocated External Factors," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 234(2-3), pages 234-256, April.
  2. Mahlberg, Bernhard & Freund, Inga & Crespo Cuaresma, Jesús & Prskawetz, Alexia, 2013. "The age-productivity pattern: Do location and sector affiliation matter?," ECON WPS - Vienna University of Technology Working Papers in Economic Theory and Policy 01/2013, Vienna University of Technology, Institute for Mathematical Methods in Economics, Research Group Economics (ECON).
  3. Martin Srholec & Pavla ?í?alová, 2013. "Does the local milieu matter for innovation? Multilevel evidence from the Czech Republic," ERSA conference papers ersa13p540, European Regional Science Association.
  4. Frank Van Oort, 2013. "Agglomeration Economics Beyond the Specialisation-Diversity Controversy," Papers in Evolutionary Economic Geography (PEEG) 1313, Utrecht University, Section of Economic Geography, revised Aug 2013.
  5. Giulio Cainelli & Andrea Fracasso & Giuseppe Vittucci Marzetti, 2012. "Spatial agglomeration and productivity in Italy: a panel smooth transition regression approach," Openloc Working Papers 1204, Public policies and local development.
  6. N.S. Bosma & F.G. van Oort, 2012. "Agglomeration Economies, Inventors and Entrepreneurs as Engines of European Regional Productivity," Working Papers 12-20, Utrecht School of Economics.
  7. Frank Oort & Niels Bosma, 2013. "Agglomeration economies, inventors and entrepreneurs as engines of European regional economic development," The Annals of Regional Science, Springer, vol. 51(1), pages 213-244, August.

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