Agglomeration and firm‐level productivity: A Bayesian spatial approach1. (18th November 2014)

• Record Type: Journal Article
• Authors: Hashiguchi, Yoshihiro; Tanaka, Kiyoyasu
• Is Part Of: Papers in regional science. Volume 94(2015)Supplement 1
• Page Start: S95
• Page End: S114
• Publication Date: 2014-11-18
• Subjects: C21 -- C51 -- R10 -- R15; Agglomeration economies -- spatial autocorrelation -- Bayes -- Chinese firm‐level data -- GIS; Regional planning -- Periodicals; City planning -- Periodicals; Urbanization -- Periodicals; Economic geography -- Periodicals; 307.12
• DOI: 10.1111/pirs.12147
• Languages: English
• ISSNs: 1056-8190

Abstract

Abstract: This paper estimates the impact of industrial agglomeration on firm‐level productivity in Chinese manufacturing sectors. To account for spatial autocorrelation across regions, we formulate a hierarchical spatial model and use a Bayesian instrumental‐variable approach. We find that agglomeration of the same industry (i.e., localization) has a productivity‐boosting effect, but agglomeration of urban population (i.e., urbanization) has no such effect. In addition, the localization effect increases with the educational levels of employees and the share of intermediate inputs in gross output. These results may suggest that agglomeration externalities occur through knowledge spillovers and input sharing among firms producing similar manufactures.