agglomeration economies, efficiency and productivity growth in the retail trade sector, 2001-2007
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Agglomeration Economies, Efficiency and Productivity Growth in the Retail Trade Sector, 2001-2007. Bruce Domazlicky Southeast Missouri State University. Outline of Presentation. The Retail Trade Sector in the U.S. Agglomeration Economies Efficiency and Productivity Growth Model - PowerPoint PPT PresentationTRANSCRIPT
Bruce DomazlickySoutheast Missouri State University
The Retail Trade Sector in the U.S. Agglomeration Economies Efficiency and Productivity Growth Model Model Results Relationship between Agglomeration
Economies & Efficiency Relationship between Agglomeration
Economies & Productivity Growth
Important Contributor to Standard of Living in an Urban Area
Supplies Goods & Services that Residents Demand
Important Source of Jobs to Urban Residents
Computerization: Bar Scanning Universal in U.S.
Improved Inventory Tracking Increased Average Size of Retail
Establishments Increased Concentration in Urban Areas at
expense of Rural Areas
Localization Economies: economies that arise when firms in the same industry locate near each other: pooling of labor force, development of industry suppliers, diffusion of ideas (technological spillovers)
Urbanization Economies: economies that arise from locating in an urban area: access to markets, labor supply, financial and other specialized services, low communication costs
Does efficiency in the retail trade sector increase with urban size?
Does productivity growth in the retail trade sector increase with urban size?
What is relationship between agglomeration economies and efficiency in the retail trade sector?
What is relationship between agglomeration economies and productivity growth in the retail trade sector?
Data Envelopment Analysis is used to measure efficiency levels
Productivity Growth is measured using the Malmquist Productivity Index
348 Metropolitan Statistical Areas in U.S. 3 Variables: Output, Labor, Capital Output and Labor from the Bureau of
Economic Analysis:Http://www.bea.gov
Capital computed using variation on method by Garofalo and Yamarik (REStat, 2002)
Variable Mean Std. Deviation Maximum Minimum
Output (millions)
1865.217 4497.217 52536.429 107.286
Labor 42892.146 89281.836 977328 4491
Capital (billions)
1.641 4.223 46.069 0.066
Table 1. Variable Statistics
Year Mean Std. Deviation Minimum Maximum
2001 0.7137 0.0961 0.4444 1
2002 0.7366 0.0938 0.4878 1
2003 0.7201 0.0900 0.4415 1
2004 0.7006 0.0919 0.4249 1
2005 0.6995 0.0977 0.4103 1
2006 0.6939 0.0984 0.4185 1
2007 0.6781 0.0938 0.4101 1
All 7 Years 0.7061 0.0909 0.4339 1
Table 2. Efficiency Estimates
Region Average Efficiency
New England 0.7272
Mid-Atlantic 0.6869
Great Lakes 0.6892
Plains 0.6448
Southeast 0.7280
Southwest 0.6797
Rocky Mountain 0.6784
Far West 0.7556
Table 4. Average Efficiency by Region
Size Average Efficiency Score Number
Less than 100,000 0.6626 23
100,001-200,000 0.6695 133
200,001-500,000 0.7081 102
500,001-1,000,000 0.7353 45
1,000,001-2,000,000 0.7789 21
More than 2,000,000 0.8230 24
Table 6. Average Efficiency Scores by Metropolitan Size
Productivity Mean Std. Deviation Minimum Maximum
TFP Growth Rate
1.2530 0.0951 1.0173 1.8110
Efficiency Change
0.9524 0.0732 0.7644 1.3878
Technical Change
1.3159 0.0252 1.2187 1.3633
Table 3. Productivity Estimates, 2001-2007
Region TFP Efficiency Change Technical Change
New England 1.2220 0.9208 1.3269
Mid-Atlantic 1.2599 0.9556 1.3188
Great Lakes 1.2024 0.9229 1.3038
Plains 1.2055 0.9195 1.3114
Southeast 1.2730 0.9687 1.3146
Southwest 1.2408 0.9312 1.3332
Rocky Mountain 1.3106 0.9910 1.3227
Far West 1.2774 0.9696 1.3174
Table 5. Average Productivity Growth by Region
Size TFP Growth Rate Efficiency Change Technical Change
Less than 100,000 1.3272 1.0165 1.3057
100,001-200,000 1.2593 0.9587 1.3136
200,001-500,000 1.2518 0.9523 1.3150
500,001-1,000,000 1.2387 0.9394 1.3187
1,000,001-2,000,000 1.2276 0.9229 1.3301
More than 2,000,000 1.2010 0.9071 1.3243
Table 7. Average Productivity Growth by Metropolitan Size
Regression Results
AVEEFF: Average Efficiency URBAN: Urbanization Economies, log of
average population LOCAL: Localization economies, relative
share of retail trade output EDUC: Percentage of population with at
least a Bachelor’s Degree
Variable Coefficient Std. Error t-Statistic
Constant 0.0684 0.0769 0.89
URBAN 0.0429 0.0042 10.23
LOCAL 0.0653 0.0216 3.03
EDUC 0.0022 0.0006 3.58
Adj. R-Squared 0.538 F-Statistic 8.77
Table 8. Efficiency RegressionDependent Variable: AVEEFFNo. of Obs.: 348
Regression Results
PROD: Productivity growth, 2001-2007 TC: Growth rate of technical change, 2001-
2007 EC: Growth rate of efficiency change, 2001-
2007
Variable PROD TC ECConstant 1.4714
(13.86)1.2547(62.76)
1.1681(14.71)
URBAN -0.0164(-2.82)
0.0048(3.60)
-0.0162(-3.63)
LOCAL 0.0173(0.66)
0.0094(1.22)
0.0060(0.30)
EDUC 0.0007(0.92)
0.0001(0.75)
0.0003(0.62)
Adj. R-Squared 0.24 0.17 0.21F-Statistic 3.11 2.37 2.80
Table 9. Productivity RegressionsNo. of Obs.: 348(Numbers in parentheses are t-statistics.)
Efficiency in urban areas increase with city size & relative importance of sector
Productivity change is due solely to technical change
Efficiency change declines as urban size increases-indication of “catching-up”?