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How Local are Spatial Density Externalities? evidence from square grid data

  • Andersson, Martin

    ()

    (CIRCLE, Lund University)

  • Klaesson, Johan

    ()

    (CEnSE, Jönköping International Business School)

  • P. Larsson, Johan

    ()

    (CEnSE,Jönköping International Business School)

We analyze the geographic scale at which density externalities operate and their attenuation with distance. Using square grid data at a fine spatial resolution, we find that a doubling of neighborhood density, measured as the density of 1 km2 squares, yields an increase in the overall wage-level of a square in the order of 3 percent. The density of the wider region to which the neighborhood belongs shows a significantly smaller effect. Highly educated workers gain more from proximity to others, and when we decrease the sizes of the squares the effect is still stronger for such workers. Density effects operate simultaneously at different spatial levels, and we argue that the neighborhood effects are more prone to capture localized non-market effects, such as knowledge spillovers driven by face-to-face interaction.

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Paper provided by Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy in its series Papers in Innovation Studies with number 2012/10.

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Length: 24 pages
Date of creation: 01 Dec 2012
Date of revision:
Handle: RePEc:hhs:lucirc:2012_010
Contact details of provider: Postal: CIRCLE, Lund University, PO Box 117, SE-22100 Lund, Sweden
Phone: +46 (0) 46 222 74 68
Web page: http://www.circle.lu.se/

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  1. Olof Ejermo & Astrid Kander, 2011. "Swedish business research productivity," Industrial and Corporate Change, Oxford University Press, vol. 20(4), pages 1081-1118, August.
  2. Henri L.F. de Groot & Jacques Poot & Martijn J. Smit, 2008. "Agglomeration Externalities, Innovation and Regional Growth: Theoretical Perspectives and Meta-Analysis," Working Papers in Economics 08/01, University of Waikato, Department of Economics.
  3. Martin Andersson & Urban Gråsjö, 2009. "Spatial dependence and the representation of space in empirical models," The Annals of Regional Science, Springer, vol. 43(1), pages 159-180, March.
  4. Henry Overman, 2003. "Can We Learn Anything from Economic Geography Proper?," CEP Discussion Papers dp0586, Centre for Economic Performance, LSE.
  5. Kander, Astrid & Enflo, Kerstin & Schön, Lennart, 2007. "In Defense of Electricity as a General Purpose Technology," Papers in Innovation Studies 2007/6, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy.
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