Tax differentials and agglomeration economies in intraregional firm location

This paper analyses empirically how differences in local taxes affect the intraregional location of new manufacturing plants. These effects are examined within the random profit maximization framework while accounting for the presence of different types of agglomeration economies (localization/ urbanization/ Jacobs¿ economies) at the municipal level. We look at the location decision of more than 10,000 establishments locating between 1996 and 2003 across more than 400 municipalities in Catalonia, a Spanish region. It is necessary to restrict the choice set to the local labor market and, above all, to control for agglomeration economies so as to identify the effects of taxes on the location of new establishments.

Tax differentials and agglomeration economies in intraregional firm location

This paper analyses empirically how differences in local taxes affect the intraregional location of new manufacturing plants. These effects are examined within the random profit maximization framework while accounting for the presence of different types of agglomeration economies (localization/ urbanization/ Jacobs¿ economies) at the municipal level. We look at the location decision of more than 10,000 establishments locating between 1996 and 2003 across more than 400 municipalities in Catalonia, a Spanish region. It is necessary to restrict the choice set to the local labor market and, above all, to control for agglomeration economies so as to identify the effects of taxes on the location of new establishments.

Tax differentials and agglomeration economies in intraregional firm location

This paper analyses empirically how differences in local taxes affect the intraregional location of new manufacturing plants. These effects are examined within the random profit maximization framework while accounting for the presence of different types of agglomeration economies (localization/ urbanization/ Jacobs’ economies) at the municipal level. We look at the location decision of more than 10,000 establishments locating between 1996 and 2003 across more than 400 municipalities in Catalonia, a Spanish region. It is necessary to restrict the choice set to the local labor market and, above all, to control for agglomeration economies so as to identify the effects of taxes on the location of new establishments.

Mechanisms of agglomeration: Evidence from the location of new manufacturing firms in Spain

El objetivo de esta investigación es aportar evidencia sobre las fuentes de las economías de aglomeración para el caso español. De todas las maneras posibles que se han tomado en la literatura para medir las economías de aglomeración, nosotros lo analizamos a partir de las decisiones de localización de las empresas manufactureras. La literatura reciente ha puesto de relieve que el análisis basado en la disyuntiva localización / urbanización (relaciones dentro de un mismo sector) no es suficiente para entender las economías de aglomeración. Sin embargo, las relaciones entre los diferentes sectores sí resultan significativas al examinar por qué las empresas que pertenecen a diferentes sectores se localizan unas al lado de las otras. Con esto en mente, intentamos explicar que relaciones entre diferentes sectores pueden explicar coaglomeración. Para ello, nos centramos en aquellas relaciones entre sectores definidos a partir de los mecanismos de aglomeración de Marshall, es decir, labor market, input sharing y knowledge spillovers. Trabajamos con el labor market pooling en la medida en que los dos sectores utilizan los mismos trabajadores (clasificación de ocupaciones). Con el segundo mecanismo de Marshall, input sharing, introducimos cómo dos sectores tienen una relación de comprador / vendedor. Por último, nos referimos a dos sectores que utilizan las mismas tecnologías en cuanto a los knowledge spillovers. Con el fin de capturar todos los efectos de los mecanismos de aglomeracion en España, en esta investigación trabajamos con dos ámbitos geográficos, los municipios y los mercados de trabajo locales. La literatura existente nunca se ha puesto de acuerdo en cual es el ámbito geográfico en el que mejor trabajan los mecanismos Marshall, por lo que hemos cubierto todas las unidades geográficas potenciales.

Industrial location at a local level: some comments about the territorial level of the analysis

This paper contributes to the existing literature on industrial location by discussing some issues regarding the territorial levels that have been used in location analysis. We analyse which could be the advantages and disadvantages of performing locational analysis at a different local levels. We use data for new manufacturing firms located at municipality, county and travel to work areas level. We show that location determinants vary according to the territorial level used in the analysis, so we conclude that the level at which we perform the investigation should be carefully selected. Keywords: industrial location, cities, agglomeration economies, count data models.

Agglomeration and location: a nonparametric approach

The aim of this article is to assess the effects of several territorial characteristics, specifically agglomeration economies, on industrial location processes in the Spanish region of Catalonia. Theoretically, the level of agglomeration causes economies which favour the location of new establishments, but an excessive level of agglomeration might cause diseconomies, since congestion effects arise. The empirical evidence on this matter is inconclusive, probably because the models used so far are not suitable enough. We use a more flexible semiparametric specification, which allows us to study the nonlinear relationship between the different types of agglomeration levels and location processes. Our main statistical source is the REIC (Catalan Manufacturing Establishments Register), which has plant-level microdata on location of new industrial establishments. Keywords: agglomeration economies, industrial location, Generalized Additive Models, nonparametric estimation, count data models.

Revisiting the size-R&D productivity relation: introducing the mediating role of decision-making style on the scale and quality of innovative output

We develop a mediation model in which firm size is proposed to affect the scale and quality of innovative output through the adoption of different decision styles during the R&D process. The aim of this study is to understand how the internal changes that firms undergo as they evolve from small to larger organizations affect R&D productivity. In so doing, we illuminate the underlying theoretical mechanism affecting two different dimensions of R&D productivity, namely the scale and quality of innovative output which have not received much attention in previous literature. Using longitudinal data of Spanish manufacturing firms we explore the validity of this mediation model. Our results show that as firms evolve in size, they increasingly emphasize analytical decision making, and consequently, large-sized firms aim for higher-quality innovations while small firms aim for a larger scale of innovative output.

On the effect of the geographical scope of agglomeration economies on firm location

This article analyses how agglomeration economies shaped the location decisions of new manufacturing start-ups in Catalan municipalities in 2001-2005. We estimate whether the locations of new firms are spatially autocorrelated and whether this phenomenon is industry-specific. Our aim is to estimate the geographical scope of agglomeration economies on firm entries. The data set comes from a compulsory register of manufacturing establishments (REIC: Catalan Manufacturing Establishments Register). JEL classification: R1, R3 Keywords: firm location; spatial autocorrelation

Location Determinants of New Firms: Does Skill Level of Human Capital Really Matter?

This paper is about the role played by stock of human capital on location decisions of new manufacturing plants. We analyse the effect of several skill levels (from basic school to PhD) on decisions about the location of plants in various industries and, therefore, of different technological levels. We also test whether spatial aggregation level biases the results and determine the most appropriate areas to be considered in analyses of these phenomena. Our main statistical source is the Register of Manufacturing Establishments of Catalonia (REIC), which has plant-level microdata on the locations of new manufacturing plants. Keywords: agglomeration economies, industrial location, human capital, count-data models, spatial econometrics.

Staffing strategies in SME's: determinants of external recruitment and internal promotion

The purpose of this paper is to examine the determinants of use internal or external labour market to fill a firm vacancy in SME’s taking into account the differences existing among blue and white collar jobs. Following different theories we can identify three main reasons for use internal candidates rather than external ones‐ firm specific knowledge, adverse selection problems and motivation‐. However, there are others factors that might affect this choice but the last theories don’t take into account. In this paper we try to shed some light on what are these other factors that may affect firm decision to use internal or external labour market. Particularly we analyses the relationship among new technologies, innovation activity and firm location on the staffing strategy. The results shows difference behaviour on the decision to fill a vacancy using internal or external labour markets between manufacturing and service firms, and this decision depends not only on firm internal characteristics, like technological complexity or innovation activity, but also on firm location. The results also support the hypothesis of ports of entry especially in the manufacturing sector.

What underlies localization and urbanization economies? Evidence from the location of new firms

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 (three-digit level). First, we estimate firm location models to obtain estimates that reflect the importance of localization and urbanization economies in each industry. In a second step, we regress these estimates on industry characteristics that are related to the potential importance of three agglomeration theories, namely, labor market pooling, input sharing and knowledge spillovers. Localization effects are low and urbanization effects are high in knowledge-intensive industries, suggesting that firms (partly) locate in large cities to reap the benefits of inter-industry knowledge spillovers. We also find that localization effects are high in industries that employ workers whose skills are more industry-specific, suggesting that industries (partly) locate in specialized economic environments to share a common pool of specialized workers.

Decision Support Methods for Global Optomization

Immobile location-allocation (LA) problems is a type of LA problem that consists in determining the service each facility should offer in order to optimize some criterion (like the global demand), given the positions of the facilities and the customers. Due to the complexity of the problem, i.e. it is a combinatorial problem (where is the number of possible services and the number of facilities) with a non-convex search space with several sub-optimums, traditional methods cannot be applied directly to optimize this problem. Thus we proposed the use of clustering analysis to convert the initial problem into several smaller sub-problems. By this way, we presented and analyzed the suitability of some clustering methods to partition the commented LA problem. Then we explored the use of some metaheuristic techniques such as genetic algorithms, simulated annealing or cuckoo search in order to solve the sub-problems after the clustering analysis

Locating emergency services with priority rules: The priority queuing covering location problem

One of the assumptions of the Capacitated Facility Location Problem (CFLP) is thatdemand is known and fixed. Most often, this is not the case when managers take somestrategic decisions such as locating facilities and assigning demand points to thosefacilities. In this paper we consider demand as stochastic and we model each of thefacilities as an independent queue. Stochastic models of manufacturing systems anddeterministic location models are put together in order to obtain a formula for thebacklogging probability at a potential facility location.Several solution techniques have been proposed to solve the CFLP. One of the mostrecently proposed heuristics, a Reactive Greedy Adaptive Search Procedure, isimplemented in order to solve the model formulated. We present some computationalexperiments in order to evaluate the heuristics performance and to illustrate the use ofthis new formulation for the CFLP. The paper finishes with a simple simulationexercise.

The wage effect of an indexation clause: Evidence from Spanish manufacturing firms

An endogenous switching model of ex-ante wage changes under indexed and non-indexed settlements is estimated for the Spanish manufacturing sector using collective bargaining firm data for the 1984-1991 period. The likelihood of indexing the settlement is higher for nationwide unions than for other union groups within the works council and increases with the expected level of inflation. For wage change equations, a common structure for indexed and non-indexed settlements is strongly rejected, showing a source of nominal rigidity. For indexed contracts, the expected ex-ante total inflation coverage is nearly complete. It is also shown that workers pay a significant ex-ante wage change premium (differential) to obtain a cost of living allowance clause. However, the realised contingent compensation exceeds such a premium for all industries. Finally, important spillover effects in wage setting and the decision to index the settlement have been detected.

Supermarket key attributes and location decisions: A comparative study between British and Spanish consumers

The Maximum Capture problem (MAXCAP) is a decision model that addresses the issue of location in a competitive environment. This paper presents a new approach to determine which store s attributes (other than distance) should be included in the newMarket Capture Models and how they ought to be reflected using the Multiplicative Competitive Interaction model. The methodology involves the design and development of a survey; and the application of factor analysis and ordinary least squares. Themethodology has been applied to the supermarket sector in two different scenarios: Milton Keynes (Great Britain) and Barcelona (Spain).