A Spatial Econometric Analysis of Productivity Variations Across US Cities

Using a dynamic spatial panel model applied to 377 US Metropolitan Statistical Areas (MSAs), estimated over the period 2011-2021, significant differences are found between large MSAs regarding the relationship between labour productivity and economic mass, as measured by GDP. The methodology adopted illustrates the state of the art for spatial econometric modeling as it is often needed in practice, allowing for multiple endogenous regressors and dynamic effects. The estimation method applies synthetic instruments designed to limit negative effects of instrument overabundance.

Automated summary

This study applies a dynamic spatial panel model to estimate 377 US MSAs over the period 2011-2021. The findings reveal significant differences in the relationship between labour productivity and GDP among large MSAs. The method used represents the state of the art in spatial econometric modeling, allowing for the consideration of multiple endogenous variables and dynamic effects.