Title: Productivity and the geographic concentration of industry
Description: "A large body of research has established a positive connection between an industry's productivity and the magnitude of its presence within locally defined geographic areas.  This paper examines the extent to which this relationship can be explained by a micro-level underpinning commonly associated with productivity: establishment scale.  Looking at data on two-digit manufacturing across a sample of U.S.  metropolitan areas, I find two primary results.  First, average plant size--defined in terms of numbers of workers--increases substantially as an industry's employment in a metropolitan area rises.  Second, results from a decomposition of localization effects on labor earnings into plant-size and plant-count components reveal that the widely observed, positive association between a worker's wage and the total employment in his or her own metropolitan area-industry derives predominantly from the former, not the latter.  Localization economies, therefore, appear to be the product of plant-level organization rather than pure population effects"--Federal Reserve Bank of St. Louis web site.
Subjects: Industrial productivity