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Spatial agglomeration and productivity in Italy: a panel smooth transition regression approach

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  • Giulio Cainelli
  • Andrea Fracasso
  • Giuseppe Vittucci Marzetti

Abstract

The paper analyzes the impact of localization, urbanization and competition on firm-level TFP, using a large sample of Italian firm-level data from 1999 to 2007. In particular, the paper explores the nonlinearities of such effects, accounting for the possible presence of critical masses and/or congestion effects. We adopt a panel smooth transition regression model, so that the TFP elasticities are free to vary smoothly across two or more extreme values. Results show that localization economies and Jacobian externalities materialize only for values of, respectively, intra-industry spatial agglomeration and extra-sectoral local diversity above a certain threshold. Data instead shows no evidence of significant diseconomies. As for competition, we find a positive impact of local competition on productivity, even though such impact shrinks at high levels of competition.

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  • Giulio Cainelli & Andrea Fracasso & Giuseppe Vittucci Marzetti, 2012. "Spatial agglomeration and productivity in Italy: a panel smooth transition regression approach," Openloc Working Papers 1204, Public policies and local development.
  • Handle: RePEc:trn:utwpol:1204
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    Cited by:

    1. Nicola Cortinovis & Jing Xiao & Ron Boschma & Frank G van Oort, 2017. "Quality of government and social capital as drivers of regional diversification in Europe," Journal of Economic Geography, Oxford University Press, vol. 17(6), pages 1179-1208.
    2. B. Biagi & MG. Ladu, 2015. "Productivity and employment dynamics: new evidence from Italian regions," Working Paper CRENoS 201505, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    3. Carlos Carreira & Luís Lopes, 2016. "Collecting new pieces to the regional knowledge spillovers puzzle: high-tech versus low-tech industries," GEMF Working Papers 2016-06, GEMF, Faculty of Economics, University of Coimbra.
    4. repec:gam:jsusta:v:9:y:2017:i:10:p:1766-:d:113696 is not listed on IDEAS
    5. repec:bla:tvecsg:v:108:y:2017:i:5:p:554-570 is not listed on IDEAS
    6. repec:bla:tvecsg:v:108:y:2017:i:5:p:592-604 is not listed on IDEAS

    More about this item

    Keywords

    Agglomeration economies; Spatial concentration; Nonlinear panel; Smooth Transition Regression; Total Factor Productivity;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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