Essays on Agglomeration Economies : location patterns, attenuation and human capital spillovers

Abstract

This dissertation addresses the issue of agglomeration economies from a perspective still little studied in developing countries. Using a unique geocoded database for the manufacturing activities in Brazil, we provide a detailed set of new evidence on the geographical distribution of these activities and on the spatial extent of agglomeration economies on the birth of new establishments and on labor productivity in a micro-geographic context. The second chapter documents the patterns of location of manufacturing activity in Brazil using a distance-based measure, thus not susceptible to the modifiable areal unit problem (MAUP) that is common in traditional concentration measures. We show that in the period 2006-2015 there were no significant changes in the pattern of location of manufacturing industries in the country and that these activities are more concentrated in Brazil than in other developing countries such as China and Russia, and much more concentrated than the pattern observed in developed countries. The third chapter evaluates the spatial extent of the agglomeration economies on the location choice of new establishments and on the employment levels chosen. More specifically, we estimate the local determinants of the number of births per square kilometer and the associated employment levels as functions of the own-industry employment and other economic environment characteristics when the location decisions were made. The main results show that agglomeration economies are attenuated with distance. Moreover, in nearly all cases for both births and new-establishment employment, localization effects disappear after 5 km from the site chosen by the new establishment. The fourth chapter explores the spatial extent of human capital externalities on the wage in cities. We show that human capital spillovers are highly localized and stronger at short distances, specifically up to 1 km from the individual’s workplace. These effects are also attenuated with distance, which is consistent with the idea that knowledge spillovers occur mainly from face-to-face interaction among workers.