Presentation on theme: "Bruce Domazlicky Southeast Missouri State University."— Presentation transcript:
Bruce Domazlicky Southeast 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: Capital computed using variation on method by Garofalo and Yamarik (REStat, 2002)
RegionTFPEfficiency ChangeTechnical Change New England Mid-Atlantic Great Lakes Plains Southeast Southwest Rocky Mountain Far West Table 5. Average Productivity Growth by Region
SizeTFP Growth RateEfficiency ChangeTechnical Change Less than 100, , , , , ,001-1,000, ,000,001-2,000, More than 2,000, Table 7. Average Productivity Growth by Metropolitan Size
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
VariableCoefficientStd. Errort-Statistic Constant URBAN LOCAL EDUC Adj. R-Squared0.538F-Statistic8.77 Table 8. Efficiency Regression Dependent Variable: AVEEFF No. of Obs.: 348
PROD: Productivity growth, TC: Growth rate of technical change, EC: Growth rate of efficiency change,
VariablePRODTCEC Constant (13.86) (62.76) (14.71) URBAN (-2.82) (3.60) (-3.63) LOCAL (0.66) (1.22) (0.30) EDUC (0.92) (0.75) (0.62) Adj. R-Squared F-Statistic Table 9. Productivity Regressions No. 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”?