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Why and where do headquarters move?

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  • Strauss-Kahn, Vanessa
  • Vives, Xavier

Abstract

This paper analyzes decisions regarding the location of headquarters in the U.S. for the period 1996-2001. Using a unique [fi]rm-level database of about 30,000 U.S. headquarters, we study the [fi]rm- and location-speci[fi]c characteristics of headquarters that relocated over that period. Headquarters are concentrated, increasingly so in medium-sized service-oriented metropolitan areas, and the rate of relocation is signi[fi]cant (5% a year). Larger (in terms of sales) and younger headquarters tend to relocate more often, as well as larger (in terms of the number of headquarters) and foreign [fi]rms, and [fi]rms that are the outcome of a merger. Headquarters relocate to metropolitan areas with good airport facilities--with a dramatic impact, low corporate taxes, low average wages, high level of business services, same industry specialization, and agglomeration of headquarters in the same sector of activity--with all agglomeration variables having an important and signi[fi]cant impact.

Suggested Citation

  • Strauss-Kahn, Vanessa & Vives, Xavier, 2009. "Why and where do headquarters move?," Regional Science and Urban Economics, Elsevier, vol. 39(2), pages 168-186, March.
  • Handle: RePEc:eee:regeco:v:39:y:2009:i:2:p:168-186
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    Keywords

    Agglomeration externalities Business services Communication costs Congestion Corporate history Mergers Nested logit Airport Taxes Regional policy;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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