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The dynamics of local employment in France

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  • Pierre-Philippe Combes
  • Thierry Magnac
  • Jean-Marc Robin

    ()

Abstract

We study the impact of local economic structure on employment dynamics. Local employment is decomposed into the product of the average plant size and the number of plants in the area and industry. We estimate the dynamics of both components simultaneously using French yearly data on 36 industries and 341 areas between 1984 and 1993. The careful specification of short-run dynamics and the control for fixed effects and endogeneity are shown to be critical in the empirical model. First, static externalities are prevalent compared to dynamic ones. Moreover, whereas area-and-industry effects explain most of the spatial variation of plant size, the local number of plants is mainly driven by the current local economic structure. Policies targeted towards plant creation should thus be more efficient. For instance, large areas endowed with a small number of even size industries have both more and larger plants. A large number of plants heterogenous in size also increases the average plant size, but the number of plants is higher when plants have similar size.

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File URL: http://www.inra.fr/Internet/Departements/ESR/UR/lea/documents/wp/wp0402.pdf
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Bibliographic Info

Paper provided by Laboratoire d'Economie Appliquee, INRA in its series Research Unit Working Papers with number 0402.

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Length: 30 pages
Date of creation: Feb 2004
Date of revision:
Handle: RePEc:lea:leawpi:0402

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Postal: INRA-LEA, 48, Boulevard Jourdan, 75014 Paris, France
Phone: 331 43136364
Fax: 331 43136362
Web page: http://www.inra.fr/Internet/Departements/ESR/UR/lea/index.html

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Keywords: labor market; panel data; economic geography; employment.;

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  1. Encaoua, David & Jacquemin, Alexis, 1980. "Degree of Monopoly, Indices of Concentration and Threat of Entry," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(1), pages 87-105, February.
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  9. repec:oxf:wpaper:043 is not listed on IDEAS
  10. Combes, Pierre-Philippe & Magnac, Thierry & Robin, Jean-Marc, 2003. "The Dynamics of Local Employment in France," CEPR Discussion Papers 3912, C.E.P.R. Discussion Papers.
  11. Combes, Pierre-Philippe & Lafourcade, Miren, 2001. "Transport Cost Decline and Regional Inequalities: Evidence from France," CEPR Discussion Papers 2894, C.E.P.R. Discussion Papers.
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