The Review of Economics and Statistics Vol. 106 No. 5 2024
Productivity, Place, and Plants
Abstract
Why do cities differ so much in productivity? A long literature has sought out systematic sources, such as inherent productivity advantages, market access, agglomeration forces, or sorting. We document that up to three-quarters of the measured regional productivity dispersion is spurious, reflecting the “luck of the draw” of finite counts of idiosyncratically heterogeneous plants that happen to operate in a given location. The patterns are even more pronounced for new plants, hold for alternative productivity measures, and broadly extend to European countries. This large role for individual plants suggests a smaller role for places in driving regional differences.
- DOI
- 10.1162/rest_a_01275
- Volume
- 106
- Issue
- 5
- Pages
- 1167-1186
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref