Answer Happy

(a) [25 marks] Consider the following two Tables from the article: Greenstone, M., R. Hornbeck, and E. Moretti. 2010. "Identifying Agglomeration Spillovers: Evidence from Winners and Losers of Large Plant Openings” Journal of Political Economy 118(3): 536- 598. The Tables present regression results based on variants of the main estimating equation, How do the authors interpret the estimates? What can you conclude from the two Tables regarding the nature of agglomeration spillovers? Briefly explain. TABLE 7 CHANGES IN INCUMBENT PLANT PRODUCTIVITY FOLLOWING AN MDP OPENING FOR INCUMBENT PLANTS IN THE MDP's Two-DIGIT INDUSTRY AND ALL OTHER INDUSTRIES All Other MDP's Two- Two-Digit All Industries Digit Industry Industries (1) (2) (3) A. Model 1 Mean shift .0477 .1700** .0926 0.0231) (.0743) (.0253) [$170 m) [$102 m) [$104 m) R .9860 .9861 Observations 28,732 28,732 B. Model 2 Effect after 5 years .1203 3289 .0889 (.0517) (.2684) (.0504) [$429 m) [$197 m) ($283 m) Level change .0290 2814*** .0004 (.0210) (.0895) (.0171) Trend break .0152 .0079 .0147 (.0079) (.0344) (.0081) Pre-trend -.0044 -.0174 -.0026 (.0044) (.0265) 0.0036) R .9861 .9862 Observations 28,732 28,792 Nors - The table reports results from fitting versions of eq. (8). As a basis for comparison, col. 1 reports estimates from the baseline specification for incumbent plant in all industries (baseline estimates for incumbent plants in all industries, col. 4 of table 6). Columns 2 and 3 report estimates from a single regression, which fully interacts the winner/loser and pre/post variables with indicators for whether the incumbent plant is in the same two-digit industry as the MDP or a different industry Reported in parentheses are standard errors clustered at the county level. The numbers in brackets are the value (2006 US dollars) from the estimated increase in productivity the percentage increase in multiplied by the total value of output for the affected incumbent plants in the winning counties Significant at the 10 percent level ** Significant at the 5 percent level *** Significant at the percent level
TABLE 8 CHANGES IN INCUMBENT PLANT PRODUCTIVITY FOLLOWING AN MDP OPENING, BY MEASURES OF ECONOMIC DISTANCE BETWEEN THE MDP'S INDUSTRY AND INCUMBENT PLANT'S INDUSTRY (1) (2) (3). (4) (5) (6) (7) CPS worker transitions .0701*** .0374 (.0237) (0260) Citation pattern .0545*** .0256 (.0192) (0208) Technology input .03209 .0501 (.0173) (.0421) Technology output .0596*** .0004 (0216) (.0434) Manufacturing input .0060 -.0473 (.0123) (0289) Manufacturing output .0150 -.0145 C0196) (0230) RE .9852 .9852 .9851 .9852 .9851 .9852 .9853 Observations 29,397 29,397 29,897 29,897 29,897 29,397 28,897 Non-The table reports results from fitting versions of eq (9), which is modified from eq (8) Building on the model 1 specification in col 4 of tables, each columnades interaction terms between winner/lower and pre/post status with the indicated measures of how an incumbent plant's industry is linked to its nociated MDP industry continuous version of results in table 7). These industry linkage measures are defined and described in table 9. and here the measures are normalized to have a mean of zero and a standard deviation of one. The sample of plants is that in col. 4 of table 5, but it is restricted to plants that have industry linkage data for each measure For amigning this linkage measure the incumbent plant's industry is held fixed at its industry the year prior to the MDP opening Whenever a plant is a winner or loser more than once, it receive an additive dummy variable and interaction term for each occurrence Reported in parentheses are standard error clustered at the county level Significant at the 10 percent level ** Significant at the 5 percent level *** Significant at the percent level