The Impact of Spatial Externalities: Skills, Education and Firm Productivity

This paper analyses the role of spatial externalities in explaining the average labour productivity of Swedish manufacturing firms. The empirical findings support MAR and Porter externalities as well as general urbanization economies, but not Jacobs externalities. In addition, the matching between the firm and the regional labour force is found to be productivity-enhancing. However, firm-specific characteristics, including the characteristics of the employees, are not to be forgotten. Especially since externalities are commonly associated with knowledge spillovers, and it is through the employees that the external knowledge is absorbed and channelled to the firm as a whole.