Identifying Agglomeration Spillovers: Evidence from Winners and Losers of Large Plant Openings | Zendy

Michael Greenstone | Zendy; Richard Hornbeck | Zendy; Enrico Moretti | Zendy

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Identifying Agglomeration Spillovers: Evidence from Winners and Losers of Large Plant Openings

Author(s) -

Michael Greenstone,

Richard Hornbeck,

Enrico Moretti

Publication year - 2010

Publication title -

journal of political economy

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 21.034

H-Index - 186

eISSN - 1537-534X

pISSN - 0022-3808

DOI - 10.1086/653714

Subject(s) - total factor productivity , spillover effect , economies of agglomeration , productivity , economics , economic geography , agricultural economics , labour economics , microeconomics , macroeconomics

We quantify agglomeration spillovers by comparing changes in total factor productivity (TFP) among incumbent plants in “winning” counties that attracted a large manufacturing plant and “losing” counties that were the new plant's runner‐up choice. Winning and losing counties have similar trends in TFP prior to the new plant opening. Five years after the opening, incumbent plants' TFP is 12 percent higher in winning counties. This productivity spillover is larger for plants sharing similar labor and technology pools with the new plant. Consistent with spatial equilibrium models, labor costs increase in winning counties, indicating that profits ultimately increase less than productivity

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