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How Local are Spatial Density Externalities? Neighbourhood Effects in Agglomeration Economies

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  • Martin Andersson
  • Johan Klaesson
  • Johan P. Larsson

Abstract

A ndersson M., K laesson J. and L arsson J. P. How local are spatial density externalities? Neighbourhood effects in agglomeration economies, Regional Studies . The geographic scale at which density externalities operate is analysed in this paper. Using geocoded high-resolution data, the analysis is focused on exogenously determined within-city squares ('neighbourhoods') of 1 km-super-2. The analysis confirms a city-wide employment density-wage elasticity and an economically significant density-wage elasticity at the neighbourhood level that attenuate sharply with distance. Panel estimates over 20 years suggest a neighbourhood density-wage elasticity of about 3%, while the city-wide elasticity is about 1%. It is argued that the neighbourhood level is more prone to capture learning, e.g. through knowledge and information spillovers. This interpretation is supported by (1) significantly larger neighbourhood elasticities for university educated workers and (2) sharper attenuation with distance of the effect for such workers.

Suggested Citation

  • Martin Andersson & Johan Klaesson & Johan P. Larsson, 2016. "How Local are Spatial Density Externalities? Neighbourhood Effects in Agglomeration Economies," Regional Studies, Taylor & Francis Journals, vol. 50(6), pages 1082-1095, June.
  • Handle: RePEc:taf:regstd:v:50:y:2016:i:6:p:1082-1095
    DOI: 10.1080/00343404.2014.968119
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    References listed on IDEAS

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    Cited by:

    1. Ahlfeldt, Gabriel M. & Pietrostefani, Elisabetta, 2019. "The economic effects of density: A synthesis," Journal of Urban Economics, Elsevier, vol. 111(C), pages 93-107.
    2. repec:spr:anresc:v:60:y:2018:i:1:d:10.1007_s00168-017-0849-y is not listed on IDEAS
    3. Gabriel M. Ahfeldt & Elisabetta Pietrostefani, 2017. "The Compact City in Empirical Research: A Quantitative Literature Review," SERC Discussion Papers 0215, Spatial Economics Research Centre, LSE.
    4. Andersson, Martin & Larsson, Johan P. & Wernberg, Joakim, 2017. "The Economic Microgeography of Diversity and Specialization," Working Paper Series 1167, Research Institute of Industrial Economics.
    5. repec:spr:joevec:v:29:y:2019:i:4:d:10.1007_s00191-019-00616-z is not listed on IDEAS
    6. Ahfeldt, Gabriel M. & Pietrostefani, Elisabetta, 2017. "The compact city in empirical research: A quantitative literature review," LSE Research Online Documents on Economics 83638, London School of Economics and Political Science, LSE Library.
    7. repec:wiw:wiwreg:region_4_3_166 is not listed on IDEAS
    8. Gábor Békés & Péter Harasztosi, 2018. "Grid and shake: spatial aggregation and the robustness of regionally estimated elasticities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 60(1), pages 143-170, January.
    9. Holl, Adelheid, 2016. "Highways and productivity in manufacturing firms," Journal of Urban Economics, Elsevier, vol. 93(C), pages 131-151.
    10. Meekes, Jordy & Hassink, Wolter, 2019. "Endogenous Local Labour Markets, Regional Aggregation and Agglomeration Economies," IZA Discussion Papers 12765, Institute of Labor Economics (IZA).
    11. Martin Andersson & Johan P Larsson & Joakim Lundblad, 2015. "The Productive City Needs both - localization and urbanization economies across spatial scales in the city," ERSA conference papers ersa15p385, European Regional Science Association.
    12. repec:oup:cesifo:v:64:y:2018:i:2:p:176-215. is not listed on IDEAS
    13. repec:eee:respol:v:48:y:2019:i:6:p:1385-1398 is not listed on IDEAS
    14. Öner, Özge & Klaesson, Johan, 2018. "Ethnic Enclaves and Labor Market Outcomes – What Matters Most: Neighborhood, City or Region?," Working Paper Series 1251, Research Institute of Industrial Economics.
    15. Wallin, Tina, 2017. "An empirical study of firms’ absorptive capacity and export diversification," Working Paper Series in Economics and Institutions of Innovation 452, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.

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