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How Local are Spatial Density Externalities? evidence from square grid data

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Author Info

  • Andersson, Martin

    ()
    (CIRCLE, Lund University)

  • Klaesson, Johan

    ()
    (CEnSE, Jönköping International Business School)

  • P. Larsson, Johan

    ()
    (CEnSE,Jönköping International Business School)

Abstract

We analyze the geographic scale at which density externalities operate and their attenuation with distance. Using square grid data at a fine spatial resolution, we find that a doubling of neighborhood density, measured as the density of 1 km2 squares, yields an increase in the overall wage-level of a square in the order of 3 percent. The density of the wider region to which the neighborhood belongs shows a significantly smaller effect. Highly educated workers gain more from proximity to others, and when we decrease the sizes of the squares the effect is still stronger for such workers. Density effects operate simultaneously at different spatial levels, and we argue that the neighborhood effects are more prone to capture localized non-market effects, such as knowledge spillovers driven by face-to-face interaction.

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Bibliographic Info

Paper provided by Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy in its series CIRCLE Electronic Working Papers with number 2012/10.

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Length: 24 pages
Date of creation: 01 Dec 2012
Date of revision:
Handle: RePEc:hhs:lucirc:2012_010

Contact details of provider:
Postal: CIRCLE, Lund University, PO Box 117, SE-22100 Lund, Sweden
Phone: +46 (0) 46 222 74 68
Web page: http://www.circle.lu.se/
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Related research

Keywords: spatial scale; density; productivity; spatial dependence; geo-coded data; external scale economies; agglomeration externalities; Sweden; Modifiable Areal Unit Problem (MAUP);

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References

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  1. Henry G. Overman, 2003. "Can we learn anything from economic geography proper?," LSE Research Online Documents on Economics 20024, London School of Economics and Political Science, LSE Library.
  2. Henri L.F. de Groot & Jacques Poot & Martijn J. Smit, 2008. "Agglomeration Externalities, Innovation and Regional Growth: Theoretical Perspectives and Meta-Analysis," Working Papers in Economics 08/01, University of Waikato, Department of Economics.
  3. Martin Andersson & Urban Gråsjö, 2009. "Spatial dependence and the representation of space in empirical models," The Annals of Regional Science, Springer, vol. 43(1), pages 159-180, March.
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Cited by:
  1. Wixe, Sofia & Andersson, Martin, 2013. "Which Types of Relatedness Matter in Regional Growth? - Industry, occupation and education," Working Paper Series in Economics and Institutions of Innovation 332, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  2. Larsson, Johan P., 2013. "The Neighborhood or the Region? Untangling the density-productivity relationship using geocoded data," Working Paper Series in Economics and Institutions of Innovation 318, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  3. Wixe, Sofia, 2014. "Firm Knowledge, Neighborhood Diversity and Innovation," Working Paper Series in Economics and Institutions of Innovation 360, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.

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