Productivity and Labor Density: Agglomeration Effects over Time

This paper studies whether agglomeration benefits a clustering region through increased labor productivity by uniquely analyzing agglomeration effects in ecology oriented industries in Kitakyushu, Japan. Our empirical model further extends previous work by introducing a time dimension into the analysis. This enables us to incorporate technological progress and isolate the impact of interest rates on productivity. The past literature has not isolated these effects. Since our model explores whether higher productivity results from increased density over time, it provides policy implications, such as on the effects of labor immigrants and on aging communities.