CITIES NEVER FORGET: A SPATIALLY ROBUST ESTIMATION OF THE LOCAL AGGLOMERATION PREMIUM

Thursday 25 August 2011, 15:00 - 17:45

Quick Links:   Programme Overview  •  Contributed Session 1  •  Economic Geography I

Session: Economic Geography I
Category: European Economic Association
Chaired By: Kurt Schmidheiny, Universitat Pompeu Fabra/Universitšt Basel
When & Where: Thursday 25 August 2011, 15:00 - 17:45, 27 Georg Sverdrup, aud. 2
Presented By: Gabor Bekes, IE-HAS
Co-Author(s): Peter Harasztosi, Hungarian Central Bank and CEU

While empirical support to the positive relationship between population density and firm performance is abundant, evidence on its size and robustness is scarce. Given the large variance in size of administrative units, this may affect results. This paper explores the sensitivity of agglomeration-related productivity premium to spatial structure at disaggregated level. We use Hungarian municipal level data to estimate the premium and control for selection and simultaneity bias. We offer a test of spatial robustness of the agglomeration-productivity relationship by creating an artificial geographical grid and devising an easily implementable randomisation process to obtain standard deviations of the results.

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