We thank Albert Solé-Ollé, Josep-Maria Arauzo-Carod, Ángel Alañón-Pardo, three anonymous referees and the editor for helpful comments and suggestions. Financial support from projects ECO 2010-16934 (Ministerio de Educación y Ciencia) and 2009SGR102 (Generalitat de Catalunya) is gratefully acknowledged.
THE DETERMINANTS OF LOCALIZATION AND URBANIZATION ECONOMIES: EVIDENCE FROM THE LOCATION OF NEW FIRMS IN SPAIN†
Article first published online: 10 OCT 2013
© 2013 Wiley Periodicals, Inc.
Journal of Regional Science
Volume 54, Issue 2, pages 313–337, March 2014
How to Cite
Jofre-Monseny, J., Marín-López, R. and Viladecans-Marsal, E. (2014), THE DETERMINANTS OF LOCALIZATION AND URBANIZATION ECONOMIES: EVIDENCE FROM THE LOCATION OF NEW FIRMS IN SPAIN. Journal of Regional Science, 54: 313–337. doi: 10.1111/jors.12076
- Issue published online: 3 MAR 2014
- Article first published online: 10 OCT 2013
- Manuscript Revised: JUL 2013
- Manuscript Accepted: JUL 2013
- Manuscript Received: APR 2012
The objective of this paper is to analyze why firms in some industries locate in specialized economic environments (localization economies) while those in other industries prefer large city locations (urbanization economies). To this end, we examine the location decisions of new manufacturing firms in Spain at the city level and for narrowly defined industries. First, we estimate firm location models to obtain estimates that reflect the importance of localization and urbanization economies in each industry. Then, we regress these estimates on industry characteristics related to the potential importance of labor market pooling, input sharing, and knowledge spillovers. Urbanization effects are high in knowledge-intensive industries, suggesting that firms locate in large cities to benefit from knowledge spillovers. We also find that localization effects are high in industries that employ workers whose skills are more industry-specific, suggesting that industries locate in specialized economic environments to share a common pool of specialized workers.