Working Paper: CEPR ID: DP6858
Authors: Philippe Martin; Thierry Mayer; Florian Mayneris
Abstract: This paper analyzes empirically the effect of spatial agglomeration of activities on the productivity of firms using French individual firm data from 1996 to 2004. This allows us to control for endogeneity biases that the estimation of agglomeration economies typically encounters. French firms benefit from localization economies, but not from urbanization economies nor from competition effects. The benefits generated by increased sectoral clustering, though positive and highly significant are modest and geographically very limited. The gains from clusters are also quite well internalized by firms in their location choice: we find very little difference between the geography that would maximize productivity gains and the geography actually observed.
Keywords: clusters; localization economies; productivity; spatial concentration
JEL Codes: C23; R10; R11; R12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Excessive clustering (C38) | Congestion effects (L91) |
| Geography that maximizes productivity gains (R12) | Observed geography (R12) |
| Employment in neighboring firms of the same industry (L19) | Total Factor Productivity (TFP) (D24) |
| Localization economies (R32) | Firm productivity (D21) |
| Agglomeration (R11) | Firm productivity (D21) |