Abstract
We analyse business performance by using a unique data set 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 regional policies to transfer the productivity gains in urban areas into new investment and growth opportunities.
Original language | English |
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Pages (from-to) | 1-22 |
Number of pages | 22 |
Journal | Spatial Economic Analysis |
DOIs | |
Publication status | Published - 2020 |
Keywords
- Lombardy region
- decomposition analysis
- firm performance
- hierarchical linear model
- local agglomeration