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Agglomeration Spillovers and Persistence: New Evidence from Large Plant Openings

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Agglomeration Spillovers and Persistence: New Evidence from Large Plant Openings

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Working Paper Number CES-22-21

Abstract

CES_working_paper_series
Download Agglomeration Spillovers and Persistence: New Evidence from Large Plant Openings [PDF - > 1MB]

We use confidential Census microdata to compare outcomes for plants in counties that “win” a new plant to plants in similar counties that did not to receive the new plant, providing empirical evidence on the economic theories used to justify local industrial policies. We find little evidence that the average highly incentivized large plant generates significant productivity spillovers. Our semiparametric estimates of the overall local agglomeration function indicate that residual TFP is linear for the range of “agglomeration” densities most frequently observed, suggesting local economic shocks do not push local economies to a new higher equilibrium. Examining changes twenty years after the new plant entrant, we find some evidence of persistent, positive increases in winning county-manufacturing shares that are not driven by establishment births.

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Page Last Revised - April 21, 2023
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