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Why and Where do Headquarters Move?

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Author Info
Strauss-Kahn, Vanessa
Vives, Xavier

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Abstract

This paper analyses decisions regarding the location of headquarters in the US for the period 1996-2001. Using a unique firm-level database of about 30,000 US headquarters, we study the firm- and location-specific characteristics of headquarters that relocated over that period. Headquarters are concentrated, increasingly so in medium-sized service-oriented metropolitan areas, and the rate of relocation is significant (5% a year). Larger (in terms of sales) and younger headquarters tend to relocate more often, as well as larger (in terms of the number of headquarters) and foreign firms, and firms that are the outcome of a merger. Headquarters relocate to metropolitan areas with good airport facilities, low corporate taxes, low average wages, high level of business services and agglomeration of headquarters in the same sector of activity.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5070.

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Date of creation: May 2005
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Handle: RePEc:cpr:ceprdp:5070

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Related research
Keywords: agglomeration externalities; business services; communication costs; congestion; corporate history; mergers; nested logit; taxes;

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Find related papers by JEL classification:
F15 - International Economics - - Trade - - - Economic Integration
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Stuart S. Rosenthal & William C. Strange, 2003. "Geography, Industrial Organization, and Agglomeration," Center for Policy Research Working Papers 56, Center for Policy Research, Maxwell School, Syracuse University. [Downloadable!]
    Other versions:
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    Other versions:
  4. Gilles Duranton & Diego Puga, 2001. "Nursery Cities: Urban Diversity, Process Innovation, and the Life Cycle of Products," American Economic Review, American Economic Association, vol. 91(5), pages 1454-1477, December. [Downloadable!] (restricted)
    Other versions:
  5. Ekholm, Karolina & Forslid, Rikard, 2001. " Trade and Location with Horizontal and Vertical Multi-region Firms," Scandinavian Journal of Economics, Blackwell Publishing, vol. 103(1), pages 101-18, March. [Downloadable!] (restricted)
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  6. Glaeser, Edward L., 1999. "Learning in Cities," Journal of Urban Economics, Elsevier, vol. 46(2), pages 254-277, September. [Downloadable!] (restricted)
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  7. Leon Shilton & Craig Stanley, 1999. "Spatial Patterns of Headquarters," Journal of Real Estate Research, American Real Estate Society, vol. 17(3), pages 341-364. [Downloadable!]
  8. Head, Keith & Ries, John & Swenson, Deborah, 1995. "Agglomeration benefits and location choice: Evidence from Japanese manufacturing investments in the United States," Journal of International Economics, Elsevier, vol. 38(3-4), pages 223-247, May. [Downloadable!] (restricted)
    Other versions:
  9. Strauss-Kahn, Vanessa, 2005. "Firms' location decision across asymmetric countries and employment inequality," European Economic Review, Elsevier, vol. 49(2), pages 299-320, February. [Downloadable!] (restricted)
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  13. Dekle, Robert & Eaton, Jonathan, 1999. "Agglomeration and Land Rents: Evidence from the Prefectures," Journal of Urban Economics, Elsevier, vol. 46(2), pages 200-214, September. [Downloadable!] (restricted)
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  15. Kenneth Train, 2003. "Discrete Choice Methods with Simulation," Online economics textbooks, SUNY-Oswego, Department of Economics, number emetr2, January. [Downloadable!]
  16. J Vernon Henderson & James Davis, 2004. "The Agglomeration of Headquarters," Working Papers 04-02, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
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  17. Michael Greenstone & Enrico Moretti, 2003. "Bidding for Industrial Plants: Does Winning a 'Million Dollar Plant' Increase Welfare?," NBER Working Papers 9844, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  18. Paul Krugman, 1992. "A Dynamic Spatial Model," NBER Working Papers 4219, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  21. Devereux, Michael P. & Griffith, Rachel, 1998. "Taxes and the location of production: evidence from a panel of US multinationals," Journal of Public Economics, Elsevier, vol. 68(3), pages 335-367, June. [Downloadable!] (restricted)
    Other versions:
  22. Ellison, Glenn & Glaeser, Edward L, 1997. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 889-927, October.
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Helge Berger & Michael Ehrmann & Marcel Fratzscher, 2006. "Forecasting ECB Monetary Policy: Accuracy Is (Still) a Matter of Geography," IMF Working Papers 06/41, International Monetary Fund. [Downloadable!]
    Other versions:
  2. Miguel C. Manjon-Antolin & Josep Maria Arauzo-Carod, 2006. "Locations and Relocations: Modelling, Determinants, and Interrelations," ERSA conference papers ersa06p33, European Regional Science Association. [Downloadable!]
  3. Helge Berger & Michael Ehrmann & Marcel Fratzscher, 2006. "Geography or skills - What explains Fed watchers’ forecast accuracy of US monetary policy?," Working Paper Series 695, European Central Bank. [Downloadable!]
  4. Fabrice Defever, 2006. "Functional fragmentation and the location of multinational firms in the enlarged Europe," Cahiers de la Maison des Sciences Economiques bla06052, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
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