Geography, Institutions and Regional Economic Performance
The book brings together contributions by scholars from several countries and different “sister” disciplines (Economic Geography, Urban and Regional Economics, Innovation Studies) with different approaches to the same crucial issue: how geography, culture
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Abstract This chapter examines the link between firm productivity and the population composition of the areas in which firms operate. We combine annual firm-level microdata with area-level workforce characteristics obtained from population censuses. Overall, the results confirm the existence of agglomeration effects that operate through local labour markets. We find evidence of productive spillovers from operating in areas with high-skilled workers, and with high population density. The strength and nature of spillovers varies across different types of firms. Our findings demonstrate the importance of controlling for multiple dimensions of local workforce composition, and of analysing effects for subpopulations of firms. Keywords Productivity • Agglomeration • Workforce composition
1 Introduction This chapter examines the links between economic performance and the spatial context in which firms operate. In particular, it focuses on the impact on productivity of local workforce density, composition and diversity. A dependence of firm productivity on local workforce characteristics is predicted by a range of economic theories that emphasise productive spillovers, particularly in dense urban areas.
JEL codes: R1, R3, D24 D.C. Mare´ Motu Economic and Public Policy Research and University of Waikato, Cuba Street, Wellington 6142, New Zealand e-mail: [email protected] R. Fabling Motu Economic and Public Policy Research, Cuba Street, Wellington 6142, New Zealand e-mail: [email protected] R. Crescenzi and M. Percoco (eds.), Geography, Institutions and Regional Economic Performance, Advances in Spatial Science, DOI 10.1007/978-3-642-33395-8_4, # Springer-Verlag Berlin Heidelberg 2013
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The geography of factor inputs has long been identified as a key source of urban agglomeration economies. Smith (1904, I.3.2) highlights the gains from the greater labour specialisation that is made possible in “great towns”. Marshall (1920, Bk IV. X) famously emphasised the operation of skill accumulation and innovation in urban labour markets, and the improved access to specialised skills in thick labour markets. More recent analyses of the microfoundations of agglomeration continue to place a strong emphasis on urban labour market mechanisms. These include sharing the gains from specialisation and pooling labour market risks, improving the quality of labour market matching, and supporting the generation, diffusion and accumulation of information and knowledge (Duranton and Puga 2004). Other chapters in this book focus on productive advantages that may arise in regions with culturally diverse populations. Bakens and Nijkamp (chapter “Migrant Heterogeneity and Urban Development: A Conceptual Analysis”) outline the impacts of migrant heterogeneity on urban productivity and amenities, discussing strategies for identifying separately the two effects. Bellini and Pinelli (chapter “Cultural Diversity and Economic Performance: Evidence from European Regions”) examine the relationship between region
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