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Mapping Local Productivity Advantages In Italy: Industrial Districts, Cities Or Both?

  • Marcello Pagnini
  • Valter Di Giacinto

    ()

  • Giacinto Micucci
  • Matteo Gomellini

In this paper we compare the magnitude of local productivity advantages associated to two different spatial concentration patterns in Italy, i.e. urban areas (UA) and industrial districts (ID). UA typically display a huge concentration of population and host a wide range of economic activities, while ID are located outside UA and exhibit a strong concentration of small firms producing relatively homogenous goods. We use a very large sample of Italian manufacturing firms observed over the 1995-2006 period and resort to a wide set of econometric techniques in order to test the robustness of main empirical findings. We detect local productivity advantages for both UA and ID. However, firms located in UA attain a larger Total Factor Productivity (TFP) premium than those operating within ID. Besides, it turns out that the advantages of ID have declined over time, while those of UA remained stable. Differences in the white-blue collars composition of the local labor force appear to explain only a minor fraction of the estimated spatial TFP differentials. Production workers (blue collars) turn out to be more productive in ID, while non-production workers (white collars) are more efficiently employed in UA. By analyzing the quantiles of the sample TFP distribution, we document how higher average TFP levels within UA do not seem to be mainly driven by a selection effect pushing less efficient firms out of the market. Rather, a firm sorting effect appears to stand out, suggesting that more productive firms gain strong benefits from locating in UA. On the whole, our analysis raises the question whether Italian ID are less fit than UA to prosper in a changing world, characterized by increased globalization and by the growing use of information technologies.

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa11p1806.

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Date of creation: Sep 2011
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Handle: RePEc:wiw:wiwrsa:ersa11p1806
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  16. Marc J. Melitz & Gianmarco I.P. Ottaviano, 2005. "Market Size, Trade, and Productivity," Development Working Papers 201, Centro Studi Luca d\'Agliano, University of Milano.
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  18. Richard Baldwin & Toshihiro Okubo, 2005. "Heterogeneous Firms, Agglomeration and Economic Geography: Spatial Selection and Sorting," NBER Working Papers 11650, National Bureau of Economic Research, Inc.
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