Title: The effect of agglomeration economies on firm deaths: A comparison of firm and regional based approaches
Authors: Bernadette Power - University College Cork (Ireland) [presenting]
Ryan Geraldine - University College Cork (Ireland)
Justin Doran - University College Cork (Ireland)
Abstract: The merits of regional and firm based approaches for analyzing the effect of agglomeration economies on firm deaths in Ireland are compared. We aggregate a comprehensive dataset on Irish firm deaths to Electoral Division (ED) level, the lowest geographical scale available. Estimates of the effect of agglomeration on firm deaths from a regional analysis at ED level using cross-sectional spatial autoregressive techniques are compared to firm-level estimates from a contemporary log-log model with spatially weighted agglomeration regressors. While estimates of the effects of agglomeration using these alternative methods are much discussed in existing literature rarely are the approaches or results compared. We show that contrasting results are found using the same dataset dependent upon the unit of analysis used. Diversity lowers regional and firm deaths while specialization raises regional deaths but lowers firm deaths. Greater urbanization does not have a significant effect on firm hazards rates or equivalent regional estimates. While regional estimates provide evidence on the existence and nature of spatial dependence (positive in this case), firm estimates may provide evidence on whether this spatial dependence is due to diversity, specialization or urbanization economies. No empirical analysis to our knowledge directly compares regional and firm based approaches.