A different look at aglomeration effects in Spain

Martin-Barroso, David and Nuñez Serrano, Juan Andres and Velazquez, Francisco J. (2010): A different look at aglomeration effects in Spain.

Abstract

This paper explores the relationship between productivity and labour density at the municipality level for the Spanish economy and year 2001. Previous results on the mentioned relationship are confirrmed. Whilst agglomeration e¤ects at NUTs-3 level were important along the 1960s and 1970s, they seem to have disappeared along the second half of the 1980s. We show that agglomeration e¤ects are still present, nonetheless when analysed at a higher degree of geographical disaggregation. Recent amendments in regional governance and the creation of Comunidades Autónomas implying a higher degree of political and economic decentralization along the 1980s may have resulted in this change in agglomeration patterns. Endogeneity problems associated to estimation of productivity elasticities with respect to labour densities are taken into account by means of instrumental variable (IV) regressions. To this respect, elevation turns out to be a valid and attractive instrument for the agglomeration variable. Also we test if proximity to labour dense areas may also have a positive efect on the productivity level of a given municipality. The results show that agglomeration forces mainly operate within NUTs-3 regions the oldest administrative regional division of Spain.

• Item Type: MPRA Paper
• Language: English
• Keywords: Agglomeration, labour productivity, municipalities, IV estimation
• Subjects: R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R10 - General; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

References

Audretsch, D., Feldman, M., 1996. Research and Development spillovers and the geography of innovation and production. American Economic Review 86 (3), 630-640.

Banco de España, 1999. Central de Balances. Resultados anuales de las empresas no financieras. Tech. rep., Banco de España, Madrid.

Braunerhjelm, P., Borgman, B., 2004. Geographical concentration, entrepreneurship and regional growth: Evidence from regional data in Sweden, 1975-99. Regional Studies 38 (8), 929-947.

Broersma, L., van Dijk, J., 2008. The e¤ect of congestion and agglomeration on multifactor productivity growth in Dutch regions. Journal of Economic Geography 8 (2), 181-209.

Brülhart, M., Mathys, N., 2008. Sectoral agglomeration economies in a panel of European regions. Regional Science and Urban Economics 38 (4), 348-362.

Ciccone, A., 2002. Agglomeration e¤ects in Europe. European Economic Review 46 (2), 213-227.

Ciccone, A., Hall, R., 1996. Productivity and the density of economic activity. American Economic Review 86 (1), 54-70.

Cingano, F., Schivardi, F., 06 2004. Identifying the sources of local productivity growth. Journal of the European Economic Association 2 (4),720-742.

Combes, P., Duranton, G., Gobillon, L., Roux, S., 2008. Estimating agglomeration economies with history, geology, and worker e¤ects. C.E.P.R. Discussion Papers 6728.

Dekle, R., Eaton, J., 1999. Agglomeration and land rents evidence from the prefectures. Journal of Urban Economics 46 (2), 200-214.

Encuesta sobre Estrategias Empresariales, 2008. Las empresas industriales en 2006. Tech. rep., Fundación SEPI, Madrid.

European Commission, 2007. Fourth report on economic and social cohesion, communication from the Commission. Tech. rep., European Commission, Belgium.

Goerlich, F., Mas, M., Azagra, J., Chorén, P., 2006. La localización de la población española sobre el territorio. Un siglo de cambios. Un estudio basado en series homogéneas (1900-2001). Fundación BBVA, Bilbao.

Martínez-Galarraga, J., Paluzie-Hernández, E., Pons-Novell, J., Tirado-Fabregat, D., 2007. Agglomeration and labour productivity in Spanish industry: a long-term analysis. Working Papers in Economics 175, Universitat de Barcelona. Espai de Recerca en Economia.

Ministerio de Administraciones Públicas, 2008. Variaciones de los municipios de España desde 1842. Tech. rep.,

Ministerio de Administraciones Públicas.Secretaría General Técnica, Madrid. URL http://www.060.es

Moomaw, R., 1981. Productivity and city size? a critique of the evidence. The Quarterly Journal of Economics 96 (4), 675-688.

Ottaviano, G., Pinelli, D., 2006.Market potential and productivity: Evidence from Finnish regions. Regional Science and Urban Economics 36 (5), 636-657.

Rice, P., Venables, A., Patacchini, E., 2006. Spatial determinants of productivity: Analysis for the regions of Great Britain. Regional Science and Urban Economics 36 (6), 727-752.

Rosenthal, S., Strange, W., 2004. Evidence on the nature and sources of agglomeration economies. In: Henderson, J. V., Thisse, J. F. (Eds.), Handbook of Regional and Urban Economics. Elsevier, Amsterdam, pp. 2119-2171.

Velázquez, F.J., 1997. Determinantes de la entrada de empresas extranjeras en la industria manufacturera española. Ph.D. thesis, Universidad Complutense de Madrid, Madrid.

Viladecans, E., 2004. Agglomeration economies and industrial location: city level evidence. Journal of Economic Geography 4 (5), 565-582.