The Dynamics of Agglomeration: Evidence from Ireland and Portugal

Abstract

This paper analyses and compares the dynamics of agglomeration in Portuguese and Irish manufacturing industries between 1985 and 1998 implementing Dumais, Ellison and Glaeser (2002)'s methodology. Using comparable and exhaustive micro-level data sets, we find that industries tend to be sub ject to strong geographical mobility despite little net aggregate changes in agglomeration in both countries. When the aggregate concentration changes are decomposed into portions attributable to the different stages of the plant life cycle, we discover that births consistently play a deagglomerating role, which continues at least into the early stages of the life cycle, whereas deaths have acted to reinforce agglomeration in both countries. Nevertheless, there are some differences across countries and industries.

Keywords: agglomeration, path dependence, plant's life cycle, Ireland, Portugal

JEL Classification: R11, R12, R32, L11