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Labor-Force Heterogeneity as a Source of Agglomeration Economies in an Empirical Analysis of County-Level Determinants of Food Plant Entry

Davis, David E. and Schluter, Gerald E. (2005): Labor-Force Heterogeneity as a Source of Agglomeration Economies in an Empirical Analysis of County-Level Determinants of Food Plant Entry. Published in: Journal of Agricultural and Resource Economics , Vol. 30, No. 3 (December 2005): pp. 480-501.

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Abstract

Results of this study show that a heterogeneous labor force serves to attract new food manufacturing investment. We conduct analysis for SIC 20, Food and Kindred Product Manufacturing, and disaggregate analysis on all nine three-digit SIC food industries. Heterogeneity variables are a significant factor in nearly all specifications. We also examine which factors create the greatest increases in the expected number of new establishments. Areas with a high degree of labor heterogeneity are found to have large advantages. Labor heterogeneity is among the most important factors attracting food manufacturing to urban areas over rural areas.

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