Skew productivity distributions and agglomeration: Evidence from plant-level data

This paper empirically examines how the shapes of plant productivity distributions vary across regions based on Japan's manufacturing census. We focus on the skewness to examine the asymmetry by estimating the gamma distribution at the plant level. By linking the estimated shape parameters with economic geography variables, we find that the productivity distribution tends to be significantly left-skewed, especially in cores, regions with diversified industrial compositions, regions with weak market potential, and in agglomerated industries. These findings suggest that agglomeration economies are likely to accommodate heterogeneous plants with wide ranges of productivities.