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Agglomeration Elasticities in New Zealand

Author

Listed:
  • David C. Maré

    (Motu Economic and Public Policy Research)

  • Daniel J. Graham

    (Centre for Transport Studies, Imperial College, London)

Abstract

This paper analyses the relationship between firms’ multi-factor productivity and the effective employment density of the areas where they operate. Quantifying these agglomeration elasticities is of central importance in the evaluation of the wider economic benefits of transport investments. We estimate agglomeration elasticities using the Statistics New Zealand prototype Longitudinal Business Database: a firm-level panel covering the period 1999 to 2006. We estimate that an area with 10 percent higher effective density has firms with productivity that is 0.69 percent higher, once we control for the industry specific production functions and sorting of more productive firms across industries and locations. We present separate estimates of agglomeration elasticities for specific industries and regions, and examine the interaction of agglomeration with capital, labour, and other inputs.

Suggested Citation

  • David C. Maré & Daniel J. Graham, 2009. "Agglomeration Elasticities in New Zealand," Working Papers 09_06, Motu Economic and Public Policy Research.
    • Handle: RePEc:mtu:wpaper:09_06
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    References listed on IDEAS

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    8. Duranton, Gilles & Puga, Diego, 2004. "Micro-foundations of urban agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 48, pages 2063-2117, Elsevier.
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    Citations

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    Cited by:

    1. Richard Fabling & David C Maré, 2015. "Production function estimation using New Zealand’s Longitudinal Business Database," Working Papers 15_15, Motu Economic and Public Policy Research.
    2. Graham, Daniel J. & Gibbons, Stephen, 2019. "Quantifying Wider Economic Impacts of agglomeration for transport appraisal: Existing evidence and future directions," Economics of Transportation, Elsevier, vol. 19(C), pages 1-1.
    3. Rob Hodgson & Jacques Poot, 2011. "New Zealand Research on the Economic Impacts of Immigration 2005-2010: Synthesis and Research Agenda," RF Berlin - CReAM Discussion Paper Series 1104, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    4. Nina Goridko & Robert Nizhegorodtsev, 2018. "The Growth Points of Regional Economy and Regression Estimation for Branch Investment Multipliers," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(1), pages 29-42.
    5. Truong, Truong P. & Hensher, David A., 2012. "Linking discrete choice to continuous demand within the framework of a computable general equilibrium model," Transportation Research Part B: Methodological, Elsevier, vol. 46(9), pages 1177-1201.
    6. Maré, David C. & Graham, Daniel J., 2013. "Agglomeration elasticities and firm heterogeneity," Journal of Urban Economics, Elsevier, vol. 75(C), pages 44-56.
    7. Hazledine, Tim & Donovan, Stuart & Mak, Christine, 2017. "Urban agglomeration benefits from public transit improvements: Extending and implementing the Venables model," Research in Transportation Economics, Elsevier, vol. 66(C), pages 36-45.
    8. Andersson, Matts & Dehlin, Fredrik & Jörgensen, Peter & Pädam, Sirje, 2015. "Wider economic impacts of accessibility: a literature survey," Working papers in Transport Economics 2015:14, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    9. Eivind Tveter, 2021. "Transport network improvements: The effects on wage earnings," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(3), pages 478-491, June.
    10. David C. Maré, 2016. "Urban Productivity Estimation with Heterogeneous Prices and Labour," Working Papers 16_21, Motu Economic and Public Policy Research.
    11. Arthur Grimes, 2011. "Building Bridges: Treating a New Transport Link as a Real Option," ERSA conference papers ersa11p332, European Regional Science Association.
    12. repec:mul:je8794:doi:10.1429/34355:y:2011:i:1:p:125 is not listed on IDEAS
    13. Hensher, David A. & Truong, Truong P. & Mulley, Corinne & Ellison, Richard, 2012. "Assessing the wider economy impacts of transport infrastructure investment with an illustrative application to the North-West Rail Link project in Sydney, Australia," Journal of Transport Geography, Elsevier, vol. 24(C), pages 292-305.
    14. David C. Maré & Andrew Coleman, 2011. "Patterns of business location in Auckland," Working Papers 11_08, Motu Economic and Public Policy Research.
    15. David Hensher & Richard Ellison & Corinne Mulley, 2014. "Assessing the employment agglomeration and social accessibility impacts of high speed rail in Eastern Australia," Transportation, Springer, vol. 41(3), pages 463-493, May.
    16. Paul Conway, 2016. "Achieving New Zealand's productivity potential," Working Papers 2016/01, New Zealand Productivity Commission.
    17. Hensher, David A. & Ho, Chinh Q. & Ellison, Richard B., 2019. "Simultaneous location of firms and jobs in a transport and land use model," Journal of Transport Geography, Elsevier, vol. 75(C), pages 110-121.

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    More about this item

    Keywords

    Agglomeration; urban density; transport evaluation; productivity;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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