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Agglomeration Elasticities in New Zealand

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  • Maré, David C.
  • Graham, Daniel J

Abstract

This paper analyses the relationship between firms’ multi-factor productivity and the effective employment density of the areas where they operate. Quantifying these agglomeration elasticities is of central importance in the evaluation of the wider economic benefits of transport investments. We estimate agglomeration elasticities using the Statistics New Zealand prototype Longitudinal Business Database: a firm-level panel covering the period 1999 to 2006. We estimate that an area with 10 percent higher effective density has firms with productivity that is 0.69 percent higher, once we control for the industry specific production functions and sorting of more productive firms across industries and locations. We present separate estimates of agglomeration elasticities for specific industries and regions, and examine the interaction of agglomeration with capital, labour, and other inputs.

Suggested Citation

  • Maré, David C. & Graham, Daniel J, 2009. "Agglomeration Elasticities in New Zealand," Motu Working Papers 292641, Motu Economic and Public Policy Research.
    • Handle: RePEc:ags:motuwp:292641
    DOI: 10.22004/ag.econ.292641
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    1. is not listed on IDEAS
    2. Fabling, Richard & Mare, David C, 2015. "Production function estimation using New Zealand’s Longitudinal Business Database," Motu Working Papers 290585, Motu Economic and Public Policy Research.
    3. Hazledine, Tim & Donovan, Stuart & Mak, Christine, 2017. "Urban agglomeration benefits from public transit improvements: Extending and implementing the Venables model," Research in Transportation Economics, Elsevier, vol. 66(C), pages 36-45.
    4. Nina Goridko & Robert Nizhegorodtsev, 2018. "The Growth Points of Regional Economy and Regression Estimation for Branch Investment Multipliers," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(1), pages 29-42.
    5. Grimes, Arthur, 2011. "Building Bridges: Treating a New Transport Link as a Real Option," Motu Working Papers 291429, Motu Economic and Public Policy Research.
    6. Mare, David C., 2016. "Urban productivity estimation with heterogeneous prices and labour," Motu Working Papers 290558, Motu Economic and Public Policy Research.
    7. David Hensher & Richard Ellison & Corinne Mulley, 2014. "Assessing the employment agglomeration and social accessibility impacts of high speed rail in Eastern Australia," Transportation, Springer, vol. 41(3), pages 463-493, May.
    8. Graham, Daniel J. & Gibbons, Stephen, 2019. "Quantifying Wider Economic Impacts of agglomeration for transport appraisal: Existing evidence and future directions," Economics of Transportation, Elsevier, vol. 19(C), pages 1-1.
    9. Andersson, Matts & Dehlin, Fredrik & Jörgensen, Peter & Pädam, Sirje, 2015. "Wider economic impacts of accessibility: a literature survey," Working papers in Transport Economics 2015:14, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    10. Eivind Tveter, 2021. "Transport network improvements: The effects on wage earnings," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(3), pages 478-491, June.
    11. repec:mul:je8794:doi:10.1429/34355:y:2011:i:1:p:125 is not listed on IDEAS
    12. Truong, Truong P. & Hensher, David A., 2012. "Linking discrete choice to continuous demand within the framework of a computable general equilibrium model," Transportation Research Part B: Methodological, Elsevier, vol. 46(9), pages 1177-1201.
    13. Hensher, David A. & Truong, Truong P. & Mulley, Corinne & Ellison, Richard, 2012. "Assessing the wider economy impacts of transport infrastructure investment with an illustrative application to the North-West Rail Link project in Sydney, Australia," Journal of Transport Geography, Elsevier, vol. 24(C), pages 292-305.
    14. Rob Hodgson & Jacques Poot, 2011. "New Zealand Research on the Economic Impacts of Immigration 2005-2010: Synthesis and Research Agenda," RFBerlin Discussion Paper Series 1104, ROCKWOOL Foundation Berlin (RFBerlin).
    15. Hensher, David A. & Ho, Chinh Q. & Ellison, Richard B., 2019. "Simultaneous location of firms and jobs in a transport and land use model," Journal of Transport Geography, Elsevier, vol. 75(C), pages 110-121.
    16. Mare, David C. & Coleman, Andrew, 2011. "Patterns of business location in Auckland," Motu Working Papers 291433, Motu Economic and Public Policy Research.
    17. Maré, David C. & Graham, Daniel J., 2013. "Agglomeration elasticities and firm heterogeneity," Journal of Urban Economics, Elsevier, vol. 75(C), pages 44-56.
    18. Paul Conway, 2016. "Achieving New Zealand's productivity potential," Working Papers 2016/01, New Zealand Productivity Commission.

    More about this item

    Keywords

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    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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