Working Paper: CEPR ID: DP5070
Authors: Vanessa Strauss-Kahn; Xavier Vives
Abstract: This paper analyses decisions regarding the location of headquarters in the US for the period 1996-2001. Using a unique firm-level database of about 30,000 US headquarters, we study the firm- and location-specific characteristics of headquarters that relocated over that period. Headquarters are concentrated, increasingly so in medium-sized service-oriented metropolitan areas, and the rate of relocation is significant (5% a year). Larger (in terms of sales) and younger headquarters tend to relocate more often, as well as larger (in terms of the number of headquarters) and foreign firms, and firms that are the outcome of a merger. Headquarters relocate to metropolitan areas with good airport facilities, low corporate taxes, low average wages, high level of business services and agglomeration of headquarters in the same sector of activity.
Keywords: Agglomeration; Externalities; Business Services; Communication Costs; Congestion; Corporate History; Mergers; Nested Logit; Taxes
JEL Codes: F15; F23; L20; R12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| good airport facilities (R53) | relocation of headquarters (J62) |
| low corporate taxes (K34) | relocation of headquarters (J62) |
| low average wages (J31) | relocation of headquarters (J62) |
| high levels of business services (L84) | relocation of headquarters (J62) |
| agglomeration of headquarters (R32) | relocation of headquarters (J62) |
| externalities associated with concentration of headquarters (R32) | relocation of headquarters (J62) |
| higher concentration of similar industry headquarters (R32) | informal information exchange among executives (O36) |
| informal interactions (J46) | productivity (O49) |
| sales and age of headquarters (L81) | relocation of headquarters (J62) |