Geographic Concentration of Economic Activity: An aggregate index
This paper first proposes a measure, the mutual information index derived from the information theory, to quantify overall concentration from an axiomatic perspective. The analysis reveals that this overall concentration measure can be written as the weighed sum of the Theil index for each sector of the economy (partial concentration). Next, the generalized entropy family of concentration indexes is characterized in terms of basic axioms borrowed from the literature on income distribution and occupational segregation. Finally, these measures are used to analyze the spatial patterns of manufacturing industries in Spain along the last three decades, paying special attention to their technological intensity.
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