Agglomeration economies in Great Britain
This paper estimates agglomeration economies in Great Britain. The analysis employs
a definition of urban areas as functional economic units developed by the OECD in
collaboration with the European Union to investigate the size and sources of productivity
disparities across urban areas. It uses data from the UK Annual Survey of Hours and
Earnings and the UK Labour Force Survey between 2000 and 2018 and a two-step estimation
procedure that accounts for bias in the extent of agglomeration economies arising
from individual sorting. The results suggest that a 10% increase in employment density
of a city in Great Britain, would, on average, increase city productivity by 0.9-1
percent. The analysis also shows the estimated elasticity for employment density remains
the same before and after the 2007–08 global financial crisis, not showing any clear
structural break between city size and productivity relationship.
Published on June 08, 2020
In series:OECD Regional Development Working Papersview more titles