DP8119 The Identification of Agglomeration Economies

Author(s): Pierre-Philippe Combes, Gilles Duranton, Laurent Gobillon
Publication Date: November 2010
Keyword(s): agglomeration economies, instrumental variables, natural experiments, structural estimation
JEL(s): r12, r23
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=8119

Measures of urban productivity are typically positively associated with city population. But is this relationship causal? We discuss the main sources of bias in the proper identification of agglomeration effects. We also assess a variety of solutions that have been proposed in the literature to deal with them.