Complexities in the Spatial Scope of Agglomeration Economies

27 Pages Posted: 7 Jan 2019

See all articles by Paul Verstraten

Paul Verstraten

affiliation not provided to SSRN

Gerard Verweij

CPB Netherlands Bureau of Economic Policy Analysis

Peter Zwaneveld

CPB Netherlands Bureau of Economic Policy Analysis

Date Written: January 2019

Abstract

This paper argues that the spatial scope of agglomeration economies is more complex than is often assumed in the literature. We provide insight into this issue by showing that agglomeration on short distances (<5 km) does not significantly affect wages, whereas it has a significant and positive effect on medium distances (5–10 km). This effect attenuates rapidly across geographic space, becoming insignificant after 40–80 km. We offer several explanations for this observed distance decay pattern. The results do not imply, however, that nearby agglomeration is irrelevant to the wage formation: only highly urbanized areas benefit from agglomeration on longer distances. Furthermore, this article finds no evidence that foreign economic mass affects wages in the Netherlands, which suggests that national borders are still a substantial barrier for economic interaction.

Keywords: agglomeration economies, panel data analysis, spatial wage disparities, wages

Suggested Citation

Verstraten, Paul and Verweij, Gerard and Zwaneveld, Peter, Complexities in the Spatial Scope of Agglomeration Economies (January 2019). Journal of Regional Science, Vol. 59, Issue 1, pp. 29-55, 2019, Available at SSRN: https://ssrn.com/abstract=3310901 or http://dx.doi.org/10.1111/jors.12391

Paul Verstraten (Contact Author)

affiliation not provided to SSRN

No Address Available

Gerard Verweij

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

Peter Zwaneveld

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
1
Abstract Views
121
PlumX Metrics