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Loews Philadelphia, Washington B
Hosted By:
American Real Estate and Urban Economics Association
Agglomeration Economies and Development
Paper Session
Sunday, Jan. 7, 2018 1:00 PM - 3:00 PM
- Chair: Matthew Turner, Brown University
The Location of New Manufacturing Firms: How Important Are Agglomeration Economies
Abstract
The object of this paper is to explore whether agglomerative forces can explain the location decisions of new manufacturing firms in the face of declining manufacturing activity in the United States over the time period 2004-2011. I find that labor market pooling and input-output linkages have the largest effects, positively influencing agglomeration. Moreover, corporate taxes discourage firm activity but the effects are weaker in more geographically concentrated industries. I then investigate whether negative macro shocks would change how rm location decisions respond to agglomeration forces. The results indicate that the workings of agglomeration economies have become more pronounced after the Great Recession. New firms may become more risk averse after large negative shocks and that they are more likely to choose the place where industry relations are strong.Industrialization from Scratch: The Persistent Effects of China
Abstract
This paper studies the long-run impacts of industrial investment on the structural transformation of agrarian local economies. We exploit a massive industrialization campaign in China known as the "Third Front Movement," which invested heavily in the industrial sector in China’s remote and largely agrarian areas (the Third Front Region) in the 1960s and 1970s. Exploiting the quasi-randomness in the geographic distribution of the Movement’s investment, we find that local economies that received more investment continue to have larger and faster-growing modern sectors over two decades after the Movement ended. Urbanization is mainly accounted for by rural-to-urban transformation within the same local economy, rather than inter-regional migration. Therefore, the effects of the Movement are captured by the local residents. We find that the persistent effects are sustained by positive spillovers to a fast-growing non-state sector and explore several channels through which those spillovers take place. Finally, we discuss the welfare implications of the Movement at the national level.Agglomeration and Informality: Evidence From Peruvian Firms
Abstract
This paper contributes to the emerging literature investigating agglomeration externalities in developing countries. It is the first paper to estimate how agglomeration externality generation and reception varies for formal and informal firms by source. Using establishment level data, we find evidence of both significant agglomeration economies and diseconomies associated with the interaction of formal and informal firms. In spite of regulatory restrictions for formal and informal linkages, formal establishments benefit from an increase number of informal suppliers but not generally from an increase in formal supplier density. On the other hand, the number of workers in informal establishments demanding similar skills causes a negative effect on productivity. For establishments in some industries, increasing the number of formal and informal establishments in the same industry has a negative effect on productivity. These results are robust to different measures of productivity as well as instrumenting for agglomeration measures using Colombian input-output and labor relationships.Discussant(s)
Matthew Freedman
,
University of California-Irvine
Kristian Behrens
,
University of Québec-Montréal
Loren Brandt
,
University of Toronto
Siqi Zheng
,
Massachusetts Institute of Technology
JEL Classifications
- R1 - General Regional Economics