Agglomeration Economies within IT-Producing and IT-Consuming Industries in U.S. Regions
AbstractThis paper deals with the effects of the geographic concentration of economic activity on productivity through agglomeration economies in the U.S. economy. Our empirical study extends the literature on agglomeration economies in two directions. First we measure and compare the effects on productivity of geographic concentration in either information technology related activity (the IT sector) or in all other economic activities (the non-IT sector). Second we follow Jorgenson’s (2002) reasoning regarding the significance of the differences between IT-producing sectors and IT-using sectors and assess the differential effects of concentration in IT-producing sectors and concentration in IT-using sectors on productivity. We utilize four measures of agglomeration and analyze effects at two levels of geographic disaggregation: U.S. states and U.S. counties. We perform the analysis using a model drawn from the growth accounting literature in which total labor productivity in a region is the dependent variable. It is modeled as a function of the region’s capital-output ratio, the quality of the region’s labor supply as measured by the level of education, and an agglomeration variable measured by concentration in the IT or non-IT sectors or in the IT-producing or IT-using sectors. The cross section estimates for a single year yield mixed results. We find weak evidence in favor of an effect of concentration of IT activity on productivity at the state level. We find stronger effects on productivity at the county level from concentration in IT-producing sectors.
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Bibliographic InfoPaper provided by University of Delaware, Department of Economics in its series Working Papers with number 08-24.
Length: 30 pages
Date of creation: 2008
Date of revision:
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More information through EDIRC
Agglomeration Economies; Information Technology; Productivity;
Find related papers by JEL classification:
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- D62 - Microeconomics - - Welfare Economics - - - Externalities
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-25 (All new papers)
- NEP-EFF-2008-11-25 (Efficiency & Productivity)
- NEP-GEO-2008-11-25 (Economic Geography)
- NEP-ICT-2008-11-25 (Information & Communication Technologies)
- NEP-URE-2008-11-25 (Urban & Real Estate Economics)
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