Firm Heterogeneity and Endogenous Regional Disparities

Posted: 27 Oct 2008

See all articles by Carlo Altomonte

Carlo Altomonte

Bocconi University - Department of Policy Analysis and Public Management

Italo Colantone

Bocconi University

Multiple version iconThere are 2 versions of this paper

Date Written: November 2008

Abstract

We exploit the census of Romanian firms in order to provide a microfounded analysis of the sources of regional disparities in the country during the transition period, 1996–2001. To this extent, we adapt to the regional case a decomposition of firm-level output/value added dynamics based on semi-parametric productivity estimates. The methodology, robust to different techniques of TFP estimation, allows us to analyse the sources of regional disparities controlling for the heterogeneity in firms’ characteristics. We find that the emergence of regional disparities is to a large extent endogenous to the interaction between the restructuring activity of incumbent heterogeneous firms and the initial distribution of economic activities. A lesser role is played by the standard drivers of firms’ and workers’ cross-regional reallocation.

Keywords: regional convergence, economic geography, productivity, transition economies

JEL Classification: F12, L10, P20

Suggested Citation

Altomonte, Carlo and Colantone, Italo, Firm Heterogeneity and Endogenous Regional Disparities (November 2008). Journal of Economic Geography, Vol. 8, Issue 6, pp. 779-810, 2008. Available at SSRN: https://ssrn.com/abstract=1289159 or http://dx.doi.org/lbn019

Carlo Altomonte (Contact Author)

Bocconi University - Department of Policy Analysis and Public Management ( email )

Via Roentgen 1
Milan, 20136
Italy

Italo Colantone

Bocconi University ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

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