Simulating Confidence for the Ellison-Glaeser Index
AbstractThe Ellison-Glaeser (1997) index is an unbiased statistic of industrial localization. Though the expected value of the index is known, ad hoc values are used to interpret the extent of localization. We improve on the interpretation of the index by simulating con dence intervals while varying the underlying parameters of the lognormal distribution of plant employment size and the number of plants in the industry. In the data, we nd cases whose index value is above the ad hoc threshold that are not statistically signi cant. We nd many cases below the ad hoc threshold that are statistically signi cant.
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Bibliographic InfoPaper provided by School of Economic Sciences, Washington State University in its series Working Papers with number 2012-8.
Length: 30 pages
Date of creation: Oct 2012
Date of revision:
Ellison-Glaeser; localization; herfindahl; simulation; confidence interval;
Find related papers by JEL classification:
- C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-11 (All new papers)
- NEP-GEO-2012-11-11 (Economic Geography)
- NEP-URE-2012-11-11 (Urban & Real Estate Economics)
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