Abstract for:

Agglomeration in the Periphery

Matti  Sarvimäki,  May 2011
Paper No' SERCDP0080: | Full paper

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Keywords: Agglomeration externalities; natural advantages, migration

JEL Classification: R12; J61; N94

Is hard copy/paper copy available? YES - Paper Copy Still In Print.

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This Paper is published under the following series: SERC Discussion Papers

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Abstract:

i. This discussion paper is a completely revised version of SERCDP0047, published April 2010.

This paper argues that agglomeration externalities are important even in the rural periphery. The analysis focuses on the forced relocation of more than a tenth of the Finnish population after World War II. Using the details of the resettlement policy to construct instrumental variables for wartime population growth rate, I find that an exogenous increase in municipality's population had a positive effect on later population growth, industrialization and real wages. These findings are consistent with the presence of agglomeration externalities and inconsistent with other popular explanations for the spatial distribution of economic activity.