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Local Productivity Spillovers

  • Nathaniel Baum-Snow
  • Nicolas Gendron-Carrier
  • Ronni Pavan
American Economic Review
vol. 114, no. 4, April 2024
(pp. 1030-69)
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Abstract

Using Canadian administrative data, this paper presents evidence of revenue and productivity spillovers across firms at fine spatial scales. Accounting for the endogenous sorting of firms across space, we estimate an average elasticity of firm revenue and productivity with respect to the average quality of other firms within 75 meters of 0.024. We find scant evidence that the average firm benefits from being surrounded by a greater amount of economic activity at this spatial scale. Sorting of higher-quality firms into more productive locations and higher average and aggregate quality peer groups is salient in the data.

Citation

Baum-Snow, Nathaniel, Nicolas Gendron-Carrier, and Ronni Pavan. 2024. "Local Productivity Spillovers." American Economic Review, 114 (4): 1030-69. DOI: 10.1257/aer.20211589

Additional Materials

JEL Classification

  • D22 Firm Behavior: Empirical Analysis
  • D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
  • G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
  • L25 Firm Performance: Size, Diversification, and Scope
  • R11 Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
  • R32 Other Spatial Production and Pricing Analysis