Sectoral Agglomeration Economies in a Panel of European Regions

31 Pages Posted: 29 May 2008

See all articles by Marius Brülhart

Marius Brülhart

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne)

Nicole A. Mathys

University of Neuchatel - Faculty of Economics and Social Sciences; Federal Office for Spatial Development

Date Written: August 2007

Abstract

We estimate agglomeration economies, defined as the effect of density on labour productivity in European regions. The analysis of Ciccone (2002) is extended in two main ways. First, we use dynamic panel estimation techniques (system GMM), thus offering an alternative methodological treatment of the inherent endogeneity problem. Second, the sector dimension in the data allows for disaggregated estimation. Our results confirm the presence of significant agglomeration effects at the aggregate level, with an estimated long-run elasticity of 13 percent. Repeated cross-section regressions suggest that the strength of agglomeration effects has increased over time. At the sector level, the dominant pattern is of cross-sector "urbanisation" economies and own-sector congestion diseconomies. A notable exception is financial services, for which we find strong positive productivity effects from own-sector density.

Keywords: Dynamic panel GMM, Employment density, European regions, Productivity

JEL Classification: R10

Suggested Citation

Brulhart, Marius and Mathys, Nicole Andréa, Sectoral Agglomeration Economies in a Panel of European Regions (August 2007). , Vol. , pp. -, 2007. Available at SSRN: https://ssrn.com/abstract=1138523

Marius Brulhart (Contact Author)

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne) ( email )

Unil Dorigny, Batiment Internef
Lausanne, 1015
Switzerland
+41 21 692 3471 (Phone)
+41 21 692 3365 (Fax)

HOME PAGE: http://www.hec.unil.ch/mbrulhar/

Nicole Andréa Mathys

University of Neuchatel - Faculty of Economics and Social Sciences ( email )

Neuchatel, 2000
Switzerland

Federal Office for Spatial Development ( email )

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