Identifying Agglomeration Spillovers: Evidence from Winners and Losers of Large Plant Openings

By Michael Greenstone, Richard A. Hornbeck, Enrico Moretti. Journal of Political Economy, 2010

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We quantify agglomeration spillovers by comparing changes in total factor productivity (TFP) among incumbent plants in “winning” counties that attracted a large manufacturing plant and “losing” counties that were the new plant's runner‐up choice. Winning and losing counties have similar trends in TFP prior to the new plant opening. Five years after the opening, incumbent plants' TFP is 12 percent higher in winning counties. This productivity spillover is larger for plants sharing similar labor and technology pools with the new plant. Consistent with spatial equilibrium models, labor costs increase in winning counties, indicating that profits ultimately increase less than productivity.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/4c7a1c4e68da0331ea712e70c2d1c9403bcdf9ba

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Citations in the corpus

Place-Based Policies and Spatial Disparities across European Cities (2020, positive): “This increased local employment may generate additional jobs by increasing productivity (as in Greenstone, Hornbeck, and Moretti 2010) or demand for locally produced goods and services.”
How Close Is Close? The Spatial Reach of Agglomeration Economies (2020, background): “Structural approaches have also been taken (Baum-Snow and Pavan, 2011), as have matching methods that exploit pseudo natural experiments (Greenstone et al, 2010).”
Immigration and the Economy of Cities and Regions (2014, background): “The simple increase in density of economic activity due to immigrants (representing simply an increase in the number of worker) and to the fact that they tend to concentrate in cities may have beneficial productivity effects (e.g. Ciccone and Hall 1996 and Greenstone et al. 2010).”
Mostly pointless spatial econometrics (2012, background): “Other differencing strategies drawing on a “case-control” framework may also be appropriate, for example the “million dollar plant” analysis of Greenstone et al. (2010) which compares the effect of large plant relocations on destination U.S. counties, using their second ranked preferences—revealed…”
Inter-industry labor flows (2017, background): “These and other relatedness measures have proven highly predictive of the growth of local industries (Neffke et al., 2011; Boschma et al., 2012; Delgado et al., 2010; Rigby, 2015; Essletzbichler, 2013; Hausmann et al., 2014).”
Skill Transferability, Migration, and Development: Evidence from Population Resettlement in Indonesia (2016, methodology): “Light intensity growth has been shown to proxy for economic growth at a cross-country level (Henderson et al., 2012), and we use it here to measure changes in village-level economic activity from 1992 to 2010. (5)Friedberg (2000), Lubotsky (2007), and Abramitzky et al.”
Economic reforms and industrial policy in a panel of Chinese cities (2016, methodology): “Although the focus of the paper is empirical, and we do not present a formal model, it is useful to motivate and interpret our analysis in the light of spatial equilibrium models such as Greenstone et al. (2010) and Redding (2012). Greenstone et al.”
Multilevel innovation policy mix: A closer look at state policies that augment the federal SBIR program (2015, neutral): “This complements the broader themes and research findings within the literature (Greenstone et al., 2010; Hall et al., 2000; Jaffe et al., 2000; Lerner, 1999).”
Do spatially targeted redevelopment programs spillover (2013, methodology): “As a way to see how the choice of comparison group matters (see Greenstone et al. (2010) for an excellent example measuring the spillover effects from new manufacturing facilities), we estimate the spillover effects from the EZ program by comparing both economically and geographically close areas to”