Working Paper: NBER ID: w4840
Authors: Glenn Ellison; Edward L. Glaeser
Abstract: This paper discusses the prevalence of Silicon Valley-style localizations of individual manufacturing industries in the United States. Several models in which firms choose locations by throwing darts at a map are used to test whether the degree of localization is greater than would be expected to arise randomly and to motivate a new index of geographic concentration. The proposed index controls for differences in the size distribution of plants and for differences in the size of the geographic areas for which data is available. As a consequence, comparisons of the degree of geographic concentration across industries can be made with more confidence. We reaffirm previous observations in finding that almost all industries are localized, although the degree of localization appears to be slight in about half of the industries in our sample. We explore the nature of agglomerative forces in describing patterns of concentration, the geographic scope of localization, and the extent to which agglomerations involve plants in similar as opposed to identical industries.
Keywords: Geographic concentration; Manufacturing industries; Localization; Agglomeration; Economic growth
JEL Codes: R12; L60
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| agglomerative forces (F12) | industry localization (L69) |
| geographic concentration exceeds random location choices (R32) | evidence of agglomeration (R11) |
| new index of geographic concentration (R12) | clearer insights into localization (F30) |
| localized knowledge spillovers and natural advantages (R32) | geographic concentration (R32) |
| geographic concentration of industries (R32) | widespread localization (D39) |
| localization varies across industries (L86) | mechanisms driving agglomeration operate differently (R11) |