Spatial Concentration and Firm-Level Productivity in France

Abstract

This paper analyzes empirically the effect of spatial agglomeration of activities\non the productivity of firms using French individual firm data from 1996 to\n2004. This allows us to control for endogeneity biases that the estimation of\nagglomeration economies typically encounters. French firms benefit from\nlocalization economies, but not from urbanization economies nor from\ncompetition effects. The benefits generated by increased sectoral clustering,\nthough positive and highly significant are modest and geographically very\nlimited. The gains from clusters are also quite well internalized by firms in their\nlocation choice: we find very little difference between the geography that\nwould maximize productivity gains and the geography actually observed.

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