Estimating Verdoorn law for Italian firms and regions

Fazio, Giorgio and Maltese, Enza and Piacentino, Davide (2011): Estimating Verdoorn law for Italian firms and regions.

Abstract

In empirical regional economics, returns to scale are typically estimated at the regional level in search for evidence on alternative theories of growth and agglomeration. However, returns to scale may also have a firm-level dimension. In this paper, we exploit micro level data and estimate the dynamic Verdoorn law in a multilevel-setting, where returns to scale are obtained simultaneously for the micro and the regional level. Using Italian firm-level data and the NUTS-3 level of aggregation, we estimate the classic and augmented versions of Verdoorn law for all sectors and separately for manufacturing. Our results show that increasing returns to scale co-exist at both levels, with some degree of regional heterogeneity across the Italian peninsula.

• Item Type: MPRA Paper
• Language: English
• Keywords: Returns to scale, Verdoorn Law, Multilevel models, Italian firms
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C31 - Cross-Sectional Models ; Spatial Models ; Treatment Effect Models ; Quantile Regressions ; Social Interaction Models; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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