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Agglomeration Economies: The Heterogeneous Contribution of Human Capital and Value Chains

Author

Listed:
  • Dario Diodato
  • Frank Neffke

    (Center for International Development at Harvard University)

  • Neave O'Clery

    (Center for International Development at Harvard University)

Abstract

We document the heterogeneity across sectors in the impact labor and input-output links have on industry agglomeration. Exploiting the available degrees of freedom in coagglomeration patterns, we estimate the industry-speci c bene fits of sharing labor needs and supply links with local firms. On aggregate, coagglomeration patterns of services are at least as strongly driven by input-output linkages as those of manufacturing, whereas labor linkages are much more potent drivers of coagglomeration in services than in manufacturing. Moreover, the degree to which labor and input-output linkages are reflected in an industry's coagglomeration patterns is relevant for predicting patterns of city-industry employment growth.

Suggested Citation

  • Dario Diodato & Frank Neffke & Neave O'Clery, 2016. "Agglomeration Economies: The Heterogeneous Contribution of Human Capital and Value Chains," Growth Lab Working Papers 81, Harvard's Growth Lab.
    • Handle: RePEc:glh:wpfacu:81
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    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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