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How Provincial is your Region? Effects on Labour Productivity and Employment in Europe

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Author Info
Alfonso Gambardella
Myriam Mariani
Salvatore Torrisi

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Abstract

This paper estimates the determinants of labour productivity and employment in European NUTS2 regions. We focus on technological capabilities (proxied by regional patents), agglomeration economies (employment density), and openness, proxied by the number of airplane passengers embarked and disembarked in the region. We employ 1989-1996 data drawn from the Eurostat REGIO data base. By using instrumental variables, we confirm existing results in the literature that patents and employment density affect labour productivity. Our novel finding is that openness affects labour productivity as well. This suggests that regional advantages also stem from the ability of the regions to connect to the world that is outside them, and not just on internal factors like local infrastructures, local networks, etc.. In addition, we find that technological capabilities affect employment, while the effect of agglomeration economies and openness on the latter is less marked. Thus, technology seems to be the crucial variable for a thorough regional development. Agglomeration economies and openness benefit mostly those who are already employed, as it implies increases in their incomes with limited increases in employment.

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Paper provided by Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy in its series LEM Papers Series with number 2001/04.

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Date of creation: 15 Dec 2001
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Handle: RePEc:ssa:lemwps:2001/04

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  6. Arthur, W. Brian, 1990. "'Silicon Valley' locational clusters: when do increasing returns imply monopoly?," Mathematical Social Sciences, Elsevier, vol. 19(3), pages 235-251, June. [Downloadable!] (restricted)
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  9. Krugman, P. & Venables, A.J., 1995. "Globalization and the Inequality of Nations," Research Institute of Industrial Economics Working Papers 430, Research Institute of Industrial Economics (IFN).
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  10. Raffaele Paci, Stefano Usai, 2000. "Technological Enclaves and Industrial Districts: An Analysis of the Regional Distribution of Innovative Activity in Europe," Regional Studies, Taylor and Francis Journals, vol. 34(2), pages 97-114, April. [Downloadable!] (restricted)
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  11. Overman, Henry G. & Redding, Stephen J & Venables, Anthony J., 2001. "The Economic Geography of Trade Production and Income: A Survey of Empirics," CEPR Discussion Papers 2978, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  12. Stephen Redding & Anthony J. Venables, 2001. "Economic Geography and International Inequality," International Trade 0103003, EconWPA. [Downloadable!]
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  13. Puga, Diego, 1999. "The rise and fall of regional inequalities," European Economic Review, Elsevier, vol. 43(2), pages 303-334, February. [Downloadable!] (restricted)
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  14. Jaffe, Adam B & Trajtenberg, Manuel & Henderson, Rebecca, 1993. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 577-98, August. [Downloadable!] (restricted)
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  15. Jeffrey A. Frankel & David Romer, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June. [Downloadable!] (restricted)
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