We analyse business performance by using a unique dataset of the universe of Italian local business units. We investigate the pattern of both productivity and profitability by adopting a decomposition technique to document spatial variation across urban and non-urban areas. Aggregate evidence indicates that an urban – non-urban productivity divide exists, but this premium vanishes with respect to profitability. Plant-level estimations using a Hierarchical Linear Model show that area attractiveness positively affects productivity, whereas diseconomies of agglomeration negatively affect profitability. Coping with agglomeration costs is a priority for the regional policy if the productivity gains in urban areas could be transferred into new investment and growth opportunities.
|Publisher||Vita e Pensiero|
|Number of pages||49|
|Publication status||Published - 2019|
- firm performance
- hierachical linear model