Accounting for Neighboring Effects in Measures of Spatial Concentration

16 Pages Posted: 28 Sep 2011

See all articles by Paulo Guimaraes

Paulo Guimaraes

University of South Carolina - Darla Moore School of Business; IZA Institute of Labor Economics

Octávio Figueiredo

Universidade do Porto - Faculdade de Economia (FEP)

Douglas P. Woodward

University of South Carolina

Date Written: October 2011

Abstract

A common problem with spatial economic concentration measures based on areal data (e.g., Gini, Herfindhal, entropy, and Ellison‐Glaeser indices) is accounting for the position of regions in space. While they purport to measure spatial clustering, these statistics are confined to calculations within individual areal units. They are insensitive to the proximity of regions or to neighboring effects. Clearly, since spillovers do not recognize areal units, economic clusters may cross regional boundaries. Yet with current measures, any industrial agglomeration that traverses boundaries will be chopped into two or more pieces. Activity in adjacent spatial units is treated in exactly the same way as activity in far‐flung, nonadjacent areas. This paper shows how popular measures of spatial concentration relying on areal data can be modified to account for neighboring effects. With a U.S. application, we also demonstrate that the new instruments we propose are easy to implement and can be valuable in regional analysis.

Suggested Citation

Guimaraes, Paulo and Figueiredo, Octavio and Woodward, Douglas P., Accounting for Neighboring Effects in Measures of Spatial Concentration (October 2011). Journal of Regional Science, Vol. 51, Issue 4, pp. 678-693, 2011, Available at SSRN: https://ssrn.com/abstract=1934637 or http://dx.doi.org/10.1111/j.1467-9787.2011.00723.x

Paulo Guimaraes (Contact Author)

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
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IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Octavio Figueiredo

Universidade do Porto - Faculdade de Economia (FEP) ( email )

Rua Roberto Frias
s/n
Porto, 4200-464
Portugal

Douglas P. Woodward

University of South Carolina ( email )

The Francis M. Hipp Building
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Columbia, SC 29208
United States
803-777-2510 (Phone)
803-777-9344 (Fax)

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