TY  - JOUR
AU  - Dekle,Robert
AU  - Eaton,Jonathan
TI  - Agglomeration and the Price of Land: Evidence from the Prefectures
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4781
PY  - 1994
Y2  - June 1994
UR  - http://www.nber.org/papers/w4781
L1  - http://www.nber.org/papers/w4781.pdf
N1  - Author contact info:
Robert Dekle
Department of Economics
University of Southern California
Los Angeles, CA  90089
Tel: 213-740-2134; dekle@usc.edu
E-Mail: dekle@usc.edu

Jonathan Eaton
Department of Economics
Penn State University
608 Kern Graduate Building
University Park, PA 16802-3306
Tel: (814) 865 - 8871
Fax: (814) 863 - 4775
E-Mail: jxe22@psu.edu
AB  - We use Japanese prefectural wage and land price data to estimate the magnitude of agglomeration effects in manufacturing and finance. We also examine the range of agglomeration effects by estimating the extent to which they diminish with distance, using a specification that encompasses the polar cases of purely local agglomeration economies, on the one hand, and national increasing returns to scale, on the other.  We find that agglomeration effects are slightly stronger in financial services than in manufacturing, and that they diminish substantially with distance in either sector.  Our estimates indicate that agglomeration effects can explain about 5.6 per cent of the growth in Japanese output per worker in manufacturing and about 8.9 per cent of the growth in output per worker in financial services during 1976-1988.  Our estimates imply that, while the average elasticity of productivity with respect to agglomeration is between 10 and 15 per cent, agglomeration economies in the largest prefectures are nearly exhausted.
ER  -