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Closing the gap between absolute and relative measures of localization, concentration or specialization
Author(s) -
Bickenbach Frank,
Bode Eckhardt,
KriegerBoden Christiane
Publication year - 2013
Publication title -
papers in regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.937
H-Index - 64
eISSN - 1435-5957
pISSN - 1056-8190
DOI - 10.1111/j.1435-5957.2012.00460.x
Subject(s) - ambiguity , divergence (linguistics) , absolute (philosophy) , interpretation (philosophy) , econometrics , economics , statistics , mathematics , epistemology , philosophy , linguistics
Empirical studies on the evolution of concentration, specialization or localization of economic activity have provided ambiguous results that strongly depend on the researcher's choice of the reference. This paper develops a decomposition method for T heil indices of localization that clarifies where this ambiguity originates from. The method allows expressing the difference between absolute and relative T heil indices of localization in terms of T heil indices that are subject to straightforward interpretation. Illustrations show that the divergence of absolute from relative localization in the EU ‐15 and in UK manufacturing is largely a statistical artifact inherited from the peculiarities of the industry classifications.