Marshallian Sources of Growth and Interdependent Location of Swedish Firms and Households

Abstract

This thesis consists of three papers that examine Marshallian sources of growth and interdependent location of Swedish firms and households. Paper [I] examines the impact of static and dynamic knowledge externalities and their impact on Swedish market operating firms growth pattern between 1997 and 2005. The three types of externalities are: (i) Marshall-Arrow-Romer (MAR), (ii) Jacobs, and (iii) Porter. My empirical findings for the 40 industries can briefly be summarized in the following points: (i) static MAR, Jacobs and/or Porter externalities are present in all but nine industries; (ii) except for five cases all industries are exposed to one or more of the MAR, Jacobs and/or Porter type of dynamic externalities; (iii) contrary to previous studies but in line with theoretical predictions, we do find positive and significant effects for static as well as dynamic Jacobs externalities. Paper [II] focuses on the presence of agglomeration economies in the form of labor pooling and educational matching and their impact on economic growth in Swedish manufacturing and service industries from 1997 to 2005. To accom- plish this I employ a translog production function that enables me to decompose the total agglomeration elasticities into returns that accrue to: direct agglom- eration effects, an indirect effect of agglomeration at given input levels, a cross agglomeration effect of matching on labor pooling and vice versa. Household services is the single industry where both the labor pooling and matching hy- pothesis is supported by our data. Publishing is the sole instance of better input usage due to matching consistent with the theoretical claim. Paper [III] studies the interdependent location choices of households and firms expressed as population and employment in Swedish municipalities. Using a model of the Carlino-Mills type to investigate the impact of various location attributes such as differences in public revenue and spending patterns, accessi- bility to jobs and potential workforce, quality of the labor pool, concentration of commercial, private and public services. The findings suggest that fiscal factors significantly alters the impact of housing and accessibility attributes compared to exiting studies on Swedish data. Another finding, in line with previous stud- ies, indicate that there is a significant degree of inertia in household and firm location choices.Information and knowledge spillover; MAR; Jacobs and Porter externalities; labor pooling; interdependent location choice; panel data