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Sectoral agglomeration economies in a panel of European regions

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Listed author(s):
  • Brülhart, Marius
  • Mathys, Nicole A.

Abstract

We estimate agglomeration economies, defined as the effect of density on labour productivity in European regions. The analysis of Ciccone [Ciccone, A., 2002, Agglomeration effects in Europe, European Economic Review, 46 (2), 213-227.] is extended in two main ways. First, we use dynamic panel estimation techniques (system GMM), thus offering an alternative methodological treatment of the inherent endogeneity problem. Second, the sector dimension in the data allows for disaggregated estimation. Our results confirm the presence of significant agglomeration effects at the aggregate level, with an estimated long-run elasticity of 13%. Repeated cross-section regressions suggest that the strength of agglomeration effects has increased over time. At the sector level, the dominant pattern is of cross-sector "urbanisation" economies and own-sector congestion diseconomies. A notable exception is financial services, for which we find strong positive productivity effects from own-sector density.

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Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 38 (2008)
Issue (Month): 4 (July)
Pages: 348-362

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Handle: RePEc:eee:regeco:v:38:y:2008:i:4:p:348-362
Contact details of provider: Web page: http://www.elsevier.com/locate/regec

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  • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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  17. Marius Brülhart & Pamina Koenig, 2005. "New Economic Geography meets Comecon: Regional Wages and Industry Location in Central Europe," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 05.01, Université de Lausanne, Faculté des HEC, DEEP.
  18. Leo Sveikauskas, 1975. "The Productivity of Cities," The Quarterly Journal of Economics, Oxford University Press, vol. 89(3), pages 393-413.
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