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Wage Premia in Employment Clusters: Agglomeration or Worker Heterogeneity?

February 2010

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  June 2007

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• Working Paper

  
  
  Access to Workers or Employers? An Intra-Urban Analysis of Plant Location Decisions
  

  September 2010

  Authors: Mark J. Kutzbach

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  CES-10-21R

  This analysis attributes economies of agglomeration to either labor market pooling or employer-based productivity spillovers by distinguishing the effect of access to workers, measured by place-of-residence, from the effect of access to employers. New establishment location choices serve as a measure of productivity advantages, while census tract level data on access to same-industry employment, other-industry employment, and specialized workers, as well as metropolitan area fixed effects, measure sources of agglomeration and other locational characteristics. The four industries included are selected so that each relies on a workforce with a specialized occupation that is identifiable by place-of-residence, and that productivity and cost advantages are the primary drivers of location choice. The results show that both access to specialized workers and access to same-industry employers contribute to economies of agglomeration at an intra-urban spatial scale, and that the magnitude of the worker effect is large relative to employer-based productivity spillovers.
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