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Spatial Growth and Industry Age

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  • Klaus Desmet
  • Esteban Rossi-Hansberg

Abstract

U.S. county data for the last 20 or 30 years show that manufacturing employment has been deconcentrating. In contrast, the service sector exhibits concentration in counties with intermediate levels of employment. This paper presents a theory where local sectoral growth is driven by technological diffusion across space. The age of an industry -- measured as the time elapsed since the last major general purpose technology innovation in the sector -- determines the pattern of scale dependence in growth rates. Young industries exhibit non-monotone relationships between employment levels and growth rates, while old industries experience negative scale dependence in growth rates. The model then predicts that the relationship between county employment growth rates and county employment levels in manufacturing at the turn of the 20th century should be similar to the same relationship in services in the last 20 years. We provide evidence consistent with this prediction.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13302.

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Date of creation: Aug 2007
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Handle: RePEc:nbr:nberwo:13302

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Citations

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Cited by:
  1. R. Jason Faberman, 2007. "The relationship between the establishment age distribution and urban growth," Working Papers 07-18, Federal Reserve Bank of Philadelphia.
  2. Klaus Desmet & Esteban Rossi-Hansberg, 2010. "Spatial Development," Working Papers 2010.26, Fondazione Eni Enrico Mattei.
  3. Edward L. Glaeser & Giacomo A. M. Ponzetto & Kristina Tobio, 2010. "Cities, skills, and regional change," Economics Working Papers 1255, Department of Economics and Business, Universitat Pompeu Fabra, revised Mar 2011.
  4. James Bessen, 2010. "Communicating Technical Knowledge," Working Papers 1001, Research on Innovation.
  5. Klaus Desmet & Esteban Rossi-Hansberg, 2009. "On Spatial dynamics," Working Papers 2009-16, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
  6. Michaels, Guy & Rauch, Ferdinand & Redding, Stephen J, 2008. "Urbanization and Structural Transformation," CEPR Discussion Papers 7016, C.E.P.R. Discussion Papers.
  7. Peter R. Mueser & David Mandy & Eric Parsons, 2011. "Population Population Movements in the Presence of Agglomeration and Congestion Effects: Local Policy and the Social Optimum," Working Papers 1123, Department of Economics, University of Missouri.
  8. Anastasios Xepapadeas & William Brock, 2009. "General Pattern Formation in Recursive Dynamical Systems Models in Economics," Working Papers 2009.49, Fondazione Eni Enrico Mattei.
  9. Steven Brakman & Harry Garretsen & Charles van Marrewijk & Abdella Oumer, 2011. "The Positive Border Effect of EU Integration," CESifo Working Paper Series 3335, CESifo Group Munich.
  10. repec:iaa:wpaper:200902 is not listed on IDEAS
  11. Edward L. Glaeser & Giacomo Ponzetto & Kristina Tobio, 2010. "The Varieties of Regional Change," Working Papers 472, Barcelona Graduate School of Economics.
  12. Ohanian, Lee E. & Prescott, Edward C. & Stokey, Nancy L., 2009. "Introduction to dynamic general equilibrium," Journal of Economic Theory, Elsevier, vol. 144(6), pages 2235-2246, November.

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