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Agglomeration Economies in Small Cities and Business: The Impact of the Great Recession in Aragón (Spain)

Author

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  • Rafael González-Val

    (Departmento de Análisis Económico, Universidad de Zaragoza Facultad de Economía y Empresa (Campus Paraíso). c/ Gran Vía 2, 50005 Zaragoza, Spain
    Institut d'Economia de Barcelona (IEB), Facultat d’Economia i Empresa, Universitat de Barcelona, c/ John M. Keynes, 1-11, 08034 Barcelona, Spain)

  • Miriam Marcén

    (Departmento de Análisis Económico, Universidad de Zaragoza Facultad de Economía y Empresa (Campus Paraíso). c/ Gran Vía 2, 50005 Zaragoza, Spain)

Abstract
In this paper, we analyze the effects of productive specialization and productive diversity on employment growth at the local level during the Great Recession in Aragon, a NUTS II region in Spain. This region is characterized by (i) a high population density in the capital city (around half of the total population), giving rise to a very uneven population distribution and therefore a lot of small cities and municipalities, and (ii) a large proportion of small businesses (95% of the firms in this region have fewer than ten employees). We use annual data from 2000 to 2015 and panel data models, and grouped local business activities into three main categories: industry, construction and services. Our results show that, during this period, local specialization in any of these activities hurt local employment growth, whereas diversity had a non-significant effect on employment growth. Only in the case of services did we obtain a positive effect of diversity on local employment growth, which was restricted to the most populated cities (i.e., cities with more than 3000 inhabitants). Therefore, only diversity in services activities located in large cities contributed to employment growth during the Great Recession.

Suggested Citation

  • Rafael González-Val & Miriam Marcén, 2019. "Agglomeration Economies in Small Cities and Business: The Impact of the Great Recession in Aragón (Spain)," Sustainability, MDPI, vol. 11(14), pages 1-17, July.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:14:p:3770-:d:247049
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    References listed on IDEAS

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