Too close for comfort? Microgeography of agglomeration economies in the United Kingdom

Bibliographic Data

ID21353047
AuthorsKatiuscia Lavoratori (0000-0002-0078-4525, Warwick Business School University of Warwick Coventry UK, corresponding author), Davide Castellani (0000-0002-1823-242X, Henley Business School University of Reading Reading UK)
Year2021
Volume61
Issue5
Pages1002-1028
Publication date2021-11-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueJournal of Regional Science (JOURNAL)
Journal identifiersISSN: 0022-4146 • E-ISSN: 1467-9787
PublisherWiley (PUBLISHER • GB)
DOI10.1111/jors.12531
OpenAlexW3145572169
LanguageEN
Citations received15
References cited60

The issue of whether firm productivity is affected by agglomeration externalities is a longstanding area of research. However, the appropriate geographical level to better detect the effects of agglomeration economies and at which level these externalities work is still unclear. Using detailed firm‐level longitudinal data on 4927 manufacturing firms in the United Kingdom over the period 2008–2016, we investigate the relation between the microgeography of external agglomeration economies and firm productivity. We compare different geographical levels: city‐wide and narrowly defined neighborhoods around a firm. Results from a multilevel (mixed‐effect) model show that urbanization externalities play a role at a higher level of geographical aggregation, such as the city, whereas localization externalities operate at a finer level, within the city and in a closer neighborhood to the firm. Failing to control for more granular levels of geography results in confounding the two types of externalities. We also provide novel evidence that these externalities vary across firm (such as age, size, and productivity) and location (such as population density) characteristics

Economic geography · Economic growth · Economics · Economies of agglomeration · Externality · Microeconomics · Population · Productivity · Urbanization · Housing Market and Economics · Regional Economics and Spatial Analysis · Spatial and Panel Data Analysis