IDEAS home Printed from https://ideas.repec.org/p/wiw/wiwrsa/ersa12p373.html
   My bibliography  Save this paper

Marshall or Jacobs? Answers to an unsuitable question from an interaction model

Author

Listed:
  • Robert Lehmann
  • Jan Kluge

Abstract

This paper investigates whether localization economies as brought forward by Marshall (1890) or urbanization economies as mentioned by Jacobs (1970) are more decisive for regional gross value added per capita. Our novel approach is to explicitly allow for interdependencies between these two theories and to take into account that the initial levels of specialization and diversification might play a role. We therefore deploy a model with interaction terms and find that these two theories are not mutually exclusive in most of our sectors. In addition, the empirical results show that the initial levels of specialization and diversification do matter as well. Keywords: localization and urbanization economies, interaction models, regional gross valued added JEL Code: C33, O18, O40, R11

Suggested Citation

  • Robert Lehmann & Jan Kluge, 2012. "Marshall or Jacobs? Answers to an unsuitable question from an interaction model," ERSA conference papers ersa12p373, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa12p373
    as

    Download full text from publisher

    File URL: https://www-sre.wu.ac.at/ersa/ersaconfs/ersa12/e120821aFinal00375.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2003. "Instrumental variables and GMM: Estimation and testing," Stata Journal, StataCorp LP, vol. 3(1), pages 1-31, March.
    3. Martin, Philippe & Mayer, Thierry & Mayneris, Florian, 2011. "Spatial concentration and plant-level productivity in France," Journal of Urban Economics, Elsevier, vol. 69(2), pages 182-195, March.
    4. Blien, Uwe & Suedekum, Jens & Wolf, Katja, 2006. "Local employment growth in West Germany: A dynamic panel approach," Labour Economics, Elsevier, vol. 13(4), pages 445-458, August.
    5. Feldman, Maryann P. & Audretsch, David B., 1999. "Innovation in cities:: Science-based diversity, specialization and localized competition," European Economic Review, Elsevier, vol. 43(2), pages 409-429, February.
    6. Martin, Philippe & Mayer, Thierry & Mayneris, Florian, 2011. "Spatial concentration and plant-level productivity in France," Journal of Urban Economics, Elsevier, vol. 69(2), pages 182-195, March.
    7. Ehrl, Philipp, 2013. "Agglomeration economies with consistent productivity estimates," Regional Science and Urban Economics, Elsevier, vol. 43(5), pages 751-763.
    8. Jens Suedekum & Uwe Blien, 2005. "Local Economic Structure and Industry Development in Germany, 1993-2001," Economics Bulletin, AccessEcon, vol. 15(17), pages 1-8.
    9. Raffaele Paci & Stefano Usai, 2005. "Agglomeration Economies and Growth in Italian Local Labour Systems 1991-2001," ERSA conference papers ersa05p46, European Regional Science Association.
    10. Andrews, Donald W K, 1991. "Heteroskedasticity and Autocorrelation Consistent Covariance Matrix Estimation," Econometrica, Econometric Society, vol. 59(3), pages 817-858, May.
    11. M. Hashem Pesaran, 2021. "General diagnostic tests for cross-sectional dependence in panels," Empirical Economics, Springer, vol. 60(1), pages 13-50, January.
    12. Henderson, Vernon & Kuncoro, Ari & Turner, Matt, 1995. "Industrial Development in Cities," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 1067-1090, October.
    13. Steven Brakman & Charles van Marrewijk, 2013. "Reflections on cluster policies," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 6(2), pages 217-231.
    14. Paul Krugman, 2011. "The New Economic Geography, Now Middle-aged," Regional Studies, Taylor & Francis Journals, vol. 45(1), pages 1-7.
    15. Beaudry, Catherine & Schiffauerova, Andrea, 2009. "Who's right, Marshall or Jacobs? The localization versus urbanization debate," Research Policy, Elsevier, vol. 38(2), pages 318-337, March.
    16. John C. Driscoll & Aart C. Kraay, 1998. "Consistent Covariance Matrix Estimation With Spatially Dependent Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 549-560, November.
    17. James H. Stock & Motohiro Yogo, 2002. "Testing for Weak Instruments in Linear IV Regression," NBER Technical Working Papers 0284, National Bureau of Economic Research, Inc.
    18. van Soest, D.P. & Gerking, S.D. & van Oort, F.G., 2002. "Knowledge Externalities, Agglomeration Economies, and Employment Growth in Dutch Cities," Other publications TiSEM d3b82b0f-1b50-4845-98ce-8, Tilburg University, School of Economics and Management.
    19. Federico Cingano & Fabiano Schivardi, 2004. "Identifying the Sources of Local Productivity Growth," Journal of the European Economic Association, MIT Press, vol. 2(4), pages 720-742, June.
    20. Glaeser, Edward L & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1992. "Growth in Cities," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1126-1152, December.
      • Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc.
      • Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992. "Growth in Cities," Scholarly Articles 3451309, Harvard University Department of Economics.
    21. Rita Almeida, 2007. "Local Economic Structure and Growth," Spatial Economic Analysis, Taylor & Francis Journals, vol. 2(1), pages 65-90.
    22. K. J. Arrow, 1971. "The Economic Implications of Learning by Doing," Palgrave Macmillan Books, in: F. H. Hahn (ed.), Readings in the Theory of Growth, chapter 11, pages 131-149, Palgrave Macmillan.
    23. Robert Dekle, 2002. "Industrial Concentration And Regional Growth: Evidence From The Prefectures," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 310-315, May.
    24. Michaela Fuchs, 2011. "The determinants of local employment dynamics in Western Germany," Empirical Economics, Springer, vol. 40(1), pages 177-203, February.
    25. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 49, pages 2119-2171, Elsevier.
    26. repec:ebl:ecbull:v:15:y:2005:i:17:p:1-8 is not listed on IDEAS
    27. Daniel Hoechle, 2007. "Robust standard errors for panel regressions with cross-sectional dependence," Stata Journal, StataCorp LP, vol. 7(3), pages 281-312, September.
    28. Annette Illy & Michael Schwartz & Christoph Hornych & Martin T.W. Rosenfeld, 2011. "Local Economic Structure And Sectoral Employment Growth In German Cities," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 102(5), pages 582-593, December.
    29. Combes, Pierre-Philippe, 2000. "Economic Structure and Local Growth: France, 1984-1993," Journal of Urban Economics, Elsevier, vol. 47(3), pages 329-355, May.
    30. de Lucio, Juan J. & Herce, Jose A. & Goicolea, Ana, 2002. "The effects of externalities on productivity growth in Spanish industry," Regional Science and Urban Economics, Elsevier, vol. 32(2), pages 241-258, March.
    31. Brambor, Thomas & Clark, William Roberts & Golder, Matt, 2006. "Understanding Interaction Models: Improving Empirical Analyses," Political Analysis, Cambridge University Press, vol. 14(1), pages 63-82, January.
    32. repec:hal:wpspec:info:hdl:2441/c8dmi8nm4pdjkuc9g8mc6ihim is not listed on IDEAS
    33. Stephan Brunow & Georg Hirte, 2009. "The age pattern of human capital and regional productivity: A spatial econometric study on german regions," Papers in Regional Science, Wiley Blackwell, vol. 88(4), pages 799-823, November.
    34. Bun Song Lee & Kim Sosin & Sung Hyo Hong, 2005. "Sectoral Manufacturing Productivity Growth in Korean Regions," Urban Studies, Urban Studies Journal Limited, vol. 42(7), pages 1201-1219, June.
    35. Newey, Whitney & West, Kenneth, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 33(1), pages 125-132.
    36. Kirsi Mukkala, 2004. "Agglomeration economies in the finnish manufacturing sector," Applied Economics, Taylor & Francis Journals, vol. 36(21), pages 2419-2427.
    37. repec:hal:spmain:info:hdl:2441/c8dmi8nm4pdjkuc9g8mc6ihim is not listed on IDEAS
    38. Wolfgang Dauth, 2013. "Agglomeration and regional employment dynamics," Papers in Regional Science, Wiley Blackwell, vol. 92(2), pages 419-435, June.
    39. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Robert Lehmann, 2016. "Economic Growth and Business Cycle Forecasting at the Regional Level," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 65, May.
    2. Mikhail Y. Afanasyev & Alexander V. Kudrov, 2021. "Economic Complexity, Embedding Degree and Adjacent Diversity of the Regional Economies," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 17(2), pages 7-22.
    3. Hirte, Georg & Stephan, Andreas, 2014. "Regionale Beschäftigungswirkungen von öffentlichen Investitionen in Straßen- und Schieneninfrastruktur," Discussion Papers 2/2014, Technische Universität Dresden, "Friedrich List" Faculty of Transport and Traffic Sciences, Institute of Transport and Economics.
    4. Timo Mitze & Teemu Makkonen, 2020. "When interaction matters: the contingent effects of spatial knowledge spillovers and internal R&I on firm productivity," The Journal of Technology Transfer, Springer, vol. 45(4), pages 1088-1120, August.
    5. Luca Salvati & Margherita Carlucci & Efstathios Grigoriadis & Francesco Maria Chelli, 2018. "Uneven dispersion or adaptive polycentrism? Urban expansion, population dynamics and employment growth in an ‘ordinary’ city," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 38(1), pages 1-25, February.
    6. Stefan Arent & Alexander Eck & Michael Kloß & Oskar Krohmer, 2012. "Income Risk, Saving and Taxation:Will Precautionary Saving Survive?," ifo Working Paper Series 125, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    7. Jan Kluge & Robert Lehmann, 2012. "Spezialisierung oder Diversifikation – was trägt stärker zum sektoralen Wachstum bei?," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 19(02), pages 19-25, April.
    8. Jean-François Hoarau, 2021. "État des lieux, menaces et perspectives futures pour le tourisme à La Réunion : un regard macroéconomique," Post-Print hal-03546567, HAL.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Robert Lehmann, 2016. "Economic Growth and Business Cycle Forecasting at the Regional Level," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 65, May.
    2. Beaudry, Catherine & Schiffauerova, Andrea, 2009. "Who's right, Marshall or Jacobs? The localization versus urbanization debate," Research Policy, Elsevier, vol. 38(2), pages 318-337, March.
    3. Rita Almeida & Ana M. Fernandes, 2013. "Explaining local manufacturing growth in Chile: the advantages of sectoral diversity," Applied Economics, Taylor & Francis Journals, vol. 45(16), pages 2201-2213, June.
    4. Emanuela Marrocu & Raffaele Paci & Stefano Usai, 2013. "Productivity Growth In The Old And New Europe: The Role Of Agglomeration Externalities," Journal of Regional Science, Wiley Blackwell, vol. 53(3), pages 418-442, August.
    5. Combes, Pierre-Philippe & Gobillon, Laurent, 2015. "The Empirics of Agglomeration Economies," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 247-348, Elsevier.
    6. SHARMA Anand, 2017. "Dynamic Externalities And Regional Manufacturing Growth: Evidence From India," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 12(1), pages 185-201, April.
    7. 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.
    8. Oliver Farhauer & Alexandra Kröll, 2012. "Diversified specialisation—going one step beyond regional economics’ specialisation-diversification concept," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 32(1), pages 63-84, March.
    9. Matthias Firgo & Peter Mayerhofer, 2015. "Wissens-Spillovers und regionale Entwicklung - welche strukturpolitische Ausrichtung optimiert des Wachstum?," Working Paper Reihe der AK Wien - Materialien zu Wirtschaft und Gesellschaft 144, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik.
    10. Sofia Wixe, 2015. "The Impact of Spatial Externalities: Skills, Education and Plant Productivity," Regional Studies, Taylor & Francis Journals, vol. 49(12), pages 2053-2069, December.
    11. Giulio Cainelli & Roberto Ganau & Donato Iacobucci, 2016. "Do Geographic Concentration and Vertically Related Variety Foster Firm Productivity? Micro-Evidence from Italy," Growth and Change, Wiley Blackwell, vol. 47(2), pages 197-217, June.
    12. Mikhail Y. Afanasyev & Alexander V. Kudrov, 2021. "Economic Complexity, Embedding Degree and Adjacent Diversity of the Regional Economies," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 17(2), pages 7-22.
    13. Khaled Thabet, 2015. "Industrial structure and total factor productivity: the Tunisian manufacturing sector between 1998 and 2004," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(2), pages 639-662, March.
    14. Martijn J. Burger & Frank G. Oort & Otto Raspe, 2011. "Agglomeration and New Establishment Survival: A Mixed Hierarchical and Cross-Classified Model," Advances in Spatial Science, in: Karima Kourtit & Peter Nijkamp & Roger R. Stough (ed.), Drivers of Innovation, Entrepreneurship and Regional Dynamics, pages 45-63, Springer.
    15. Matthias Firgo & Peter Mayerhofer, 2015. "Wissensintensive Unternehmensdienste, Wissens-Spillovers und regionales Wachstum. Teilprojekt 1: Wissens-Spillovers und regionale Entwicklung – Welche strukturpolitische Ausrichtung optimiert das Wach," WIFO Studies, WIFO, number 58342.
    16. Giulio Cainelli & Sandro Montresor & Giuseppe Vittucci Marzetti, 2014. "Spatial agglomeration and firm exit: a spatial dynamic analysis for Italian provinces," Small Business Economics, Springer, vol. 43(1), pages 213-228, June.
    17. Rafael Boix & Joan Trullén, 2004. "Knowledge, networks of cities and growth in regional urban systems: theory, measurement and policy implications," ERSA conference papers ersa04p85, European Regional Science Association.
    18. Illy, Annette & Hornych, Christoph & Schwartz, Michael & Rosenfeld, Martin T. W., 2009. "Urban Growth in Germany – The Impact of Localization and Urbanization Economies," IWH Discussion Papers 19/2009, Halle Institute for Economic Research (IWH).
    19. Giulio Cainelli & Andrea Fracasso & Giuseppe Vittucci Marzetti, 2015. "Spatial agglomeration and productivity in Italy: A panel smooth transition regression approach," Papers in Regional Science, Wiley Blackwell, vol. 94, pages 39-67, November.
    20. Canfei He & Fenghua Pan, 2010. "Economic Transition, Dynamic Externalities and City-industry Growth in China," Urban Studies, Urban Studies Journal Limited, vol. 47(1), pages 121-144, January.

    More about this item

    Keywords

    localization and urbanization economies; interaction models; regional gross valued added jel code: c33; o18; o40; r11;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa12p373. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gunther Maier (email available below). General contact details of provider: http://www.ersa.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.