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Agglomeration Effects In A Developing Economy Evidence From Turkey

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  • Cem Özgüzel

    (Université Paris 1 Panthéon-Sorbonne)

Abstract

Spatial inequalities in Turkey are a source of considerable policy concern. In this paper, I estimate agglomeration effects for Turkish provinces to shed light on the origins of spatial inequality in productivity and provide evidence from a developing country context which literature needs. I use social security data, an administrative dataset recently made available at the NUTS-3 level, for 81 provinces of Turkey for the period 2008-2013 and carry out a twostep estimation. I use a variety of panel data techniques and historical instruments to deal with estimation concerns. I estimate an elasticity of labor productivity with respect to the density of 0.056-0.06, which is higher than in developed countries and around the levels observed in developing countries. Contrasting the evidence coming from developed countries, I find weak effects for sorting of workers across Turkish provinces based on observable characteristics.

Suggested Citation

  • Cem Özgüzel, 2019. "Agglomeration Effects In A Developing Economy Evidence From Turkey," Working Papers 1341, Economic Research Forum, revised 20 Aug 2019.
    • Handle: RePEc:erg:wpaper:1341
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    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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