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Not So Footloose After All: Locational Behavior Of Information Technology Establishments In The United States, 1989-1998

  • Simon CONDLIFFE

    (College of Human Services, Education and Public Policy, University of Delaware)

  • William R. LATHAM

    ()

    (Department of Economics & School of Urban Affairs and Public Policy, University of)

Among the benefits that technology can provide is greater connectivity among economic agents. Commerce now occurs across great geographic distances at nominal transaction costs. Technology, therefore, seems to have the potential to unshackle economic agents from their suppliers and customers, enabling them to seek out alternative locations without being at a comparative disadvantage to other businesses. In this paper we address the following question, "Is there convincing evidence to support the thesis that, for firms in the information technology industry, distance is dead and they truly are footloose in choosing their locations?" Using a data set that only recently became available and which contains establishment births by county, this paper presents evidence that firms in the information technology industry respond positively to the economies found in metropolitan areas. This implies that the characteristics of such areas relative to those of non-metropolitan areas (population size, educational attainment of the labor force, and various kinds of agglomeration economies) make them attractive locations for information technology establishments. Therefore we find that, at least for the information technology industry, distance is not dead.

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Article provided by Region et Developpement, LEAD, Universite du Sud - Toulon Var in its journal Région et Développement.

Volume (Year): 24 (2006)
Issue (Month): ()
Pages: 45-60

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Handle: RePEc:tou:journl:v:24:y:2006:p:45-60
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  1. Rosenthal, Stuart S. & Strange, William C., 2001. "The Determinants of Agglomeration," Journal of Urban Economics, Elsevier, vol. 50(2), pages 191-229, September.
  2. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 1999. "Information Technology, Workplace Organization and the Demand for Skilled Labor: Firm-Level Evidence," NBER Working Papers 7136, National Bureau of Economic Research, Inc.
  3. Stuart S. Rosenthal & William C. Strange, 2003. "Geography, Industrial Organization, and Agglomeration," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 377-393, May.
  4. Cletus C. Coughlin & Eran Segev, 1997. "Location determinants of new foreign-owned manufacturing plants," Working Papers 1997-018, Federal Reserve Bank of St. Louis.
  5. Bartik, Timothy J, 1985. "Business Location Decisions in the United States: Estimates of the Effects of Unionization, Taxes, and Other Characteristics of States," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(1), pages 14-22, January.
  6. Cole, Ismail M., 2000. "Spatial Differences in Manufacturing Firm Births and Deaths and Local Economic Conditions: Evidence from Pennsylvania," The Review of Regional Studies, Southern Regional Science Association, vol. 30(2), pages 215-236, Fall.
  7. Leslie E. Papke, 1989. "Interstate Business Tax Differentials and New Firm Location: Evidence from Panel Data," NBER Working Papers 3184, National Bureau of Economic Research, Inc.
  8. Carlton, Dennis W, 1983. "The Location and Employment Choices of New Firms: An Econometric Model with Discrete and Continuous Endogenous Variables," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 440-49, August.
  9. Guimaraes, Paulo & Figueiredo, Octavio & Woodward, Douglas, 2000. "Agglomeration and the Location of Foreign Direct Investment in Portugal," Journal of Urban Economics, Elsevier, vol. 47(1), pages 115-135, January.
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