Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/183396 
Year of Publication: 
2017
Series/Report no.: 
IFN Working Paper No. 1167
Publisher: 
Research Institute of Industrial Economics (IFN), Stockholm
Abstract: 
As cities increasingly become centers of economic growth and innovation, there is a need to understand their inner workings and organization in greater detail. We use ge-coded firm-level panel data at the sub-city level to assess the long-standing question whether agglomeration economies derive from specialization (within-industry) or diversity (between-industry). We show that these two types of externalities co-exist, but differ in their spatial distribution and attenuation within cities. There are robust positive effects of diversity and specialization on firms' TFP growth at the local within-city neighborhood level, especially for firms in high-tech and knowledge-intensive activities. While specialization effects are bound to the local sub-city level, we demonstrate a positive effect of overall diversity also at the city-wide level. The results resonate with the idea that urban economies provide a mix of industrial diversity and specialisation. A location in a within-city industry cluster in a diversified, large city appears to let firms enjoy the benefits of local industry-specific externalities, while reaping the general city-wide benefits of a diversified city.
Subjects: 
productivity
diversity
specialization
externalities
knowledge spillovers
attenuation
agglomeration economies
geocoding
JEL: 
R12
D24
L23
Document Type: 
Working Paper

Files in This Item:
File
Size
793.1 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.