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Agglomeration and Productivity - evidence from firm-level data

  • Andersson, Martin

    ()

    (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

  • Lööf, Hans

    ()

    (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

Do agglomerations stimulate productivity? An extensive literature on agglomeration economies, or urban increasing returns, has analyzed this question with aggregated spatial data. This paper estimates the relationship between agglomeration and productivity at the firm level using static and dynamic models. It makes use of a rich dataset comprising register information on all manufacturing firms in Sweden with 10 or more employees over the period 1997-2004. Three things emerge. First, firms located in larger regions are more productive when controlling for size, human capital, physical capital, ownership structure, import and export, industry classification and time trend. Second, results from dynamic panel estimations suggest a learning effect in that agglomeration enhances firms’ productivity. Third, the role of agglomeration phenomena does not seem to have a clear coupling to firm size.

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Paper provided by Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies in its series Working Paper Series in Economics and Institutions of Innovation with number 170.

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Length: 29 pages
Date of creation: 25 Mar 2009
Date of revision:
Handle: RePEc:hhs:cesisp:0170
Contact details of provider: Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden
Phone: +46 8 790 95 63
Web page: http://www.infra.kth.se/cesis/

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