Is There a Rural-Urban Divide? Location and Productivity of UK Manufacturing

Middlesex University Business School Department of Economics and Statistics Discussion Paper No. 139

37 Pages Posted: 9 May 2011

See all articles by Marian Rizov

Marian Rizov

University of Lincoln (UK) - Lincoln International Business School; Lincoln Economics and Finance (LEAF) Research Group

Patrick Paul Walsh

UCD; Institute for the Study of Labor (IZA)

Date Written: March 1, 2010

Abstract

We compute aggregate productivity of manufacturing industries by urban, rural less sparse and rural sparse locations in the UK from firm-specific total factor productivities, which are estimated by a semi-parametric algorithm within 4-digit manufacturing industries using FAME data over the period 1994-2001. We analyse the productivity differentials across location categories by decomposing them into industry productivity effect and industry composition effect. Our analysis indicates that at the end of twentieth century a rural-urban divide in manufacturing productivity still remains but there is a tendency of convergence between rural and urban location categories possibly due to increased competitive pressure. The industry composition effect is positively correlated with the industry productivity effect suggesting that locations with high productivity are also characterised by industrial structure enhancing productivity.

Keywords: Total factor productivity, structural estimation, rural-urban definition, UK manufacturing

JEL Classification: D24, R11, R30

Suggested Citation

Rizov, Marian and Walsh, Patrick Paul, Is There a Rural-Urban Divide? Location and Productivity of UK Manufacturing (March 1, 2010). Middlesex University Business School Department of Economics and Statistics Discussion Paper No. 139, Available at SSRN: https://ssrn.com/abstract=1835084 or http://dx.doi.org/10.2139/ssrn.1835084

Marian Rizov (Contact Author)

University of Lincoln (UK) - Lincoln International Business School ( email )

Brayford Pool
Lincoln, LN6 7TS
United Kingdom

Lincoln Economics and Finance (LEAF) Research Group ( email )

United Kingdom

Patrick Paul Walsh

UCD ( email )

University College Dublin
Belfield, Dublin Dublin 4
Ireland

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

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