
Real Estate Papers
Document Type
Journal Article
Date of this Version
2005
Publication Source
The Review of Economic Studies
Volume
72
Issue
4
Start Page
1077
Last Page
1106
DOI
10.1111/0034-6527.00362
Abstract
To study the detailed location patterns of industries, and particularly the tendency for industries to cluster relative to overall manufacturing, we develop distance-based tests of localization. In contrast to previous studies, our approach allows us to assess the statistical significance of departures from randomness. In addition, we treat space as continuous instead of using an arbitrary collection of geographical units. This avoids problems relating to scale and borders. We apply these tests to an exhaustive U.K. data-set. For four-digit industries, we find that (i) 52% of them are localized at a 5% confidence level, (ii) localization mostly takes place at small scales below 50 km, (iii) the degree of localization is very skewed, and (iv) industries follow broad sectoral patterns with respect to localization. Depending on the industry, smaller establishments can be the main drivers of both localization and dispersion. Three-digit sectors show similar patterns of localization at small scales as well as a tendency to localize at medium scales.
Copyright/Permission Statement
This is a pre-copyedited, author-produced PDF of an article accepted for publication in The Review of Economic Studies following peer review. The version of record is available online at: http://restud.oxfordjournals.org/content/72/4/1077.short
Recommended Citation
Duranton, G., & Overman, H. G. (2005). Testing for Localization Using Micro-Geographic Data. The Review of Economic Studies, 72 (4), 1077-1106. http://dx.doi.org/10.1111/0034-6527.00362
Date Posted: 27 November 2017
This document has been peer reviewed.