The Dynamics of Local Employment in France

45 Pages Posted: 22 Jul 2003

See all articles by Pierre-Philippe Combes

Pierre-Philippe Combes

Université de Lyon; Sciences Po - Department of Economics; Centre for Economic Policy Research (CEPR)

Thierry Magnac

Toulouse School of Economics; University of Toulouse 1 - Industrial Economic Institute (IDEI); IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR)

Jean-Marc Robin

École Normale Supérieure (ENS) - Laboratoire d'Economie Theorique et Appliquee (LEA); National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); French National Institute for Agricultural Research (INRA); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

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Date Written: May 2003

Abstract

This Paper studies the impact of local economic structure on local sectoral employment growth. Local employment growth is decomposed into 'internal' growth (the growth of the size of existing plants) and 'external' growth (the creation of new plants). Using panel data methods, we estimate the dynamics of both variables simultaneously. Our observations refer to 36 manufacturing, trade and service sectors and 341 French 'Employment Areas' in every year between 1984 and 1993. Carefully specifying the short-run dynamics and controlling for fixed effects and endogeneity are proved to be critical devices. The low order of the selected model, an ARMA (1,1), implies that static externalities are prevalent compared to dynamic ones. Moreover, whereas fixed effects explain most of the spatial variation of plant size, plant creation is mainly determined by the current local economic structure. Policies targeted on the creation of new plants should therefore prove to be more rapidly efficient. For instance, large areas endowed with a small number of even size sectors and large leader firms transferring growth to smaller numerous plants experience larger growth.

Keywords: Economic geography, employment, panel data, local labour markets

JEL Classification: C33, D40, L23, R11

Suggested Citation

Combes, Pierre-Philippe and Magnac, Thierry and Robin, Jean-Marc, The Dynamics of Local Employment in France (May 2003). Available at SSRN: https://ssrn.com/abstract=427100

Pierre-Philippe Combes (Contact Author)

Université de Lyon ( email )

92 Rue Pasteur
Lyon, 69007
France

Sciences Po - Department of Economics ( email )

28, rue des Saints peres
Paris, 75007
France

HOME PAGE: http://https://www.gate.cnrs.fr/ppcombes

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Thierry Magnac

Toulouse School of Economics ( email )

Manufacture des Tabacs
21 Allees de Brienne
Toulouse, 31000
France

University of Toulouse 1 - Industrial Economic Institute (IDEI) ( email )

Manufacture des Tabacs
21 Allee de Brienne bat. F
Toulouse Cedex, F-31000
France

IZA Institute of Labor Economics ( email )

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

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Jean-Marc Robin

École Normale Supérieure (ENS) - Laboratoire d'Economie Theorique et Appliquee (LEA) ( email )

48 boulevard Jourdan
75014 Paris
France
+33 1 4313 6365 (Phone)
+33 1 4313 6362 (Fax)

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

15 Boulevard Gabriel Peri
15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

French National Institute for Agricultural Research (INRA)

147, rue de l'Universite
Paris Cedex 07, 78-Yvelines 75338
France

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

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

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