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Simulating Confidence for the Ellison-Glaeser Index

  • Andrew J. Cassey
  • Ben O. Smith


    (School of Economic Sciences, Washington State University)

The Ellison-Glaeser (1997) index is an unbiased statistic of industrial localization. Though the expected value of the index is known, ad hoc values are used to interpret the extent of localization. We improve on the interpretation of the index by simulating con dence intervals while varying the underlying parameters of the lognormal distribution of plant employment size and the number of plants in the industry. In the data, we nd cases whose index value is above the ad hoc threshold that are not statistically signi cant. We nd many cases below the ad hoc threshold that are statistically signi cant.

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Paper provided by School of Economic Sciences, Washington State University in its series Working Papers with number 2012-8.

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Length: 30 pages
Date of creation: Oct 2012
Date of revision:
Handle: RePEc:wsu:wpaper:cassey-7
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