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An information‐theoretic approach to the analysis of location and colocation patterns

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  • Alje van Dam
  • Andres Gomez‐Lievano
  • Frank Neffke
  • Koen Frenken

Abstract

The study of location and colocation of economic activities lies at the heart of economic geography and related disciplines, but the indices used to quantify these patterns are often defined ad hoc and lack a clear statistical foundation. We propose a statistical framework to quantify location and colocation associations of economic activities using information‐theoretic measures. We relate the resulting measures to existing measures of revealed comparative advantage, localization, specialization, and coagglomeration and show how different measures derive from the same general framework. To support the use of these measures in hypothesis testing and statistical inference, we develop a Bayesian estimation approach to provide measures of uncertainty and statistical significance of the estimated quantities. We illustrate this framework in an application to an analysis of location and colocation patterns of occupations in US cities.

Suggested Citation

  • Alje van Dam & Andres Gomez‐Lievano & Frank Neffke & Koen Frenken, 2023. "An information‐theoretic approach to the analysis of location and colocation patterns," Journal of Regional Science, Wiley Blackwell, vol. 63(1), pages 173-213, January.
    • Handle: RePEc:bla:jregsc:v:63:y:2023:i:1:p:173-213
    DOI: 10.1111/jors.12621
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    1. Matias Nehuen Iglesias, 2021. "The Overlooked Insights from Correlation Structures in Economic Geography," Papers in Evolutionary Economic Geography (PEEG) 2105, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Jan 2021.
    2. Li, Yang & Neffke, Frank M.H., 2024. "Evaluating the principle of relatedness: Estimation, drivers and implications for policy," Research Policy, Elsevier, vol. 53(3).
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    4. Koen Frenken & Frank Neffke & Alje van Dam, 2023. "Capabilities, institutions and regional economic development: a proposed synthesis," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 16(3), pages 405-416.
    5. Matte Hartog & Andres Gomez-Lievano & Ricardo Hausmann & Frank Neffke, 2024. "Inventing modern invention: the professionalization of technological progress in the US," Papers in Evolutionary Economic Geography (PEEG) 2408, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Apr 2024.

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