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Assessing the Localization Pattern of German Manufacturing & Service Industries - A Distance Based Approach

  • Hyun-Ju Koh

    ()

    (University of Munich)

  • Nadine Riedel

    ()

    (Oxford University Centre for Business Taxation)

This paper assesses the agglomeration pattern of four-digit industries in Germany using a rich data set on the population of German firms. To identify geographical agglomeration, we follow the distance based approach of Duranton and Overman (2005) and find that the location pattern of 78% of our industries departs from randomness in the sense that firms exhibit significant geographical localization. In line with previous studies on manufacturing firms in the UK and France, our analysis suggests that especially traditional manufacturing industries exhibit strong localization patterns. Moreover, we find that geographical localization is not restricted to the manufacturing sector but that it plays an equally, or even more important role in service industries.

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Paper provided by Oxford University Centre for Business Taxation in its series Working Papers with number 0913.

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Date of creation: 2009
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Handle: RePEc:btx:wpaper:0913
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  1. Devereux, Michael P. & Griffith, Rachel & Simpson, Helen, 2004. "The geographic distribution of production activity in the UK," Regional Science and Urban Economics, Elsevier, vol. 34(5), pages 533-564, September.
  2. Guy Dumais & Glenn Ellison & Edward L. Glaeser, 2002. "Geographic Concentration As A Dynamic Process," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 193-204, May.
  3. Glaeser, Edward L & Mare, David C, 2001. "Cities and Skills," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 316-42, April.
  4. Duranton, Gilles & Overman, Henry G, 2002. "Testing for Localization Using Micro-Geographic Data," CEPR Discussion Papers 3379, C.E.P.R. Discussion Papers.
  5. Duranton, Gilles & Puga, Diego, 2003. "Microfoundations of Urban Agglomeration Economies," CEPR Discussion Papers 4062, C.E.P.R. Discussion Papers.
  6. Björn Alecke & Christoph Alsleben & Frank Scharr & Gerhard Untiedt, 2006. "Are there really high-tech clusters? The geographic concentration of German manufacturing industries and its determinants," The Annals of Regional Science, Springer, vol. 40(1), pages 19-42, March.
  7. Bjoern Alecke & Gerhard Untiedt, 2006. "Die geografische Konzentration von Industrie und Dienstleistungen in Deutschland. Neue empirische Evidenz mittels des Ellison-Glaeser-Index," Working Papers 2-2006, GEFRA - Gesellschaft fuer Finanz- und Regionalanalysen.
  8. E. D. Gould, 2007. "Cities, Workers, and Wages: A Structural Analysis of the Urban Wage Premium," Review of Economic Studies, Oxford University Press, vol. 74(2), pages 477-506.
  9. Helsley, Robert W. & Strange, William C., 1990. "Matching and agglomeration economies in a system of cities," Regional Science and Urban Economics, Elsevier, vol. 20(2), pages 189-212, September.
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