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A note on MAR and Jacobs externalities in the Tunisian manufacturing industries

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Abstract

The aim of this paper is to identify the effect of neighborhood peer groups on firm’s performance, approximated by the value added per worker. More specifically, we distinguish between the effects of own firm’s characteristics (direct effects) and mean characteristics of their neighbors (endogenous and contextual effects) on its output level. Using the Conditional Maximum Likelihood estimator proposed by Lee (J Econom, 140(2):333–374, 2007) on Tunisian data, we show that the average value added per worker of peers affect significantly individual firm’s performance. In addition, contextual peer effects are also significant. The multiplier effect on labor productivity varies between 1.6 and 2.03 according to the reference group definition.

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Notes

  1. In reference to contributions of Marshall (1920), Arrow (1962), Romer (1990).

  2. See Lee (2007); Bramoullé et al. (2009) and Boucher et al. (2014) for more details.

  3. Les cahiers de l’IEQ (Institut d’Économie Quantitative), No 16, Mars 2002.

  4. ‘Répertoire National des Entreprises’.

  5. For both maps, we use the Jenks natural breaks classification method, to determine the best arrangement of firms into different classes by minimizing the variance within classes and maximizing the variance between classes.

  6. This assumption ensures that there is sufficient variation in group sizes (see Davezies et al. (2009) for more details).

  7. See Olley and Pakes (1996) and Levinsohn and Petrin (2003) for methodological details on TFP.

  8. Sargent and Rodriguez (2000) argued that both labor productivity and total factor productivity (TFP) are useful indicators of growth trends in the economy, but the choice should depend on several factors such as the time period of interest, the quality and comparability of the capital stock data and the growth model assumed. The authors argued that the labor productivity is the suitable measure if the time period of interest is less than a decade.

  9. According to Fischer et al. (2009) “a change in the human capital level in region (observation) \(i\) will not only exert a direct effect on the productivity level of this region, but also an indirect effect on productivity levels in other regions \(i\ne j\)”.

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Authors and Affiliations

  1. High Institute of Management, University of Sousse, Sousse, Tunisia

    Mohamed Amara

  2. High Institute of Management, University of Tunis, Tunis, Tunisia

    AbdelRahmen El Lahga

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  1. Mohamed Amara
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  2. AbdelRahmen El Lahga
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Correspondence to Mohamed Amara.

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Amara, M., El Lahga, A. A note on MAR and Jacobs externalities in the Tunisian manufacturing industries. Lett Spat Resour Sci 8, 151–167 (2015). https://doi.org/10.1007/s12076-014-0121-3

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