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Industrial agglomeration and spatial persistence of employment in software publishing

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  • George Deltas
  • Dakshina De Silva
  • Robert P. McComb

Abstract

We use geocoded administrative establishment data in Texas to estimate the effects of localization economies on the spatial persistence of industrial employment in the software industry. The choice of the software industry allows us to distinguish between the spatial persistence of employment due to human capital spillovers from that due to the labor pool channel. Unlike previous research, this analysis is independent of administrative boundaries. The results suggest that a location, defined as a 1-mile radius circle, with an initial concentration of software industry employment, retains a disproportionate number of employees 6 years later despite significant job turnover. Software industry employment in surrounding areas has small effects. The results are not driven by higher establishment growth rates in high concentration locations or by differences in survival probabilities. They are fully explained by: (i) the retention by other establishments in a location of jobs lost by an establishment in that location, and (ii) an increased propensity of software establishments to enter in or near locations with prior software establishment presence. The entry effect diminishes sharply beyond one mile. We demonstrate that these findings are most consistent with labor channel effects, although the presence of human capital spillovers cannot be fully excluded.

Suggested Citation

  • George Deltas & Dakshina De Silva & Robert P. McComb, 2015. "Industrial agglomeration and spatial persistence of employment in software publishing," Working Papers 85393182, Lancaster University Management School, Economics Department.
    • Handle: RePEc:lan:wpaper:85393182
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    References listed on IDEAS

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    More about this item

    Keywords

    agglomeration economies; labor pools; knowledge spillovers; firm growth;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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