Agglomeration Economies and Employment Growth: New Evidence from the Information Technology Sector in Italy

ABSTRACT This paper uses local labour market area (LLMA) data to investigate the dynamics of employment in the information technology (IT) sector in Italy between 2001 and 2005. The aim is to test if agglomeration forces might significantly affect local IT employment growth. The OLS results are broadly consistent with those of earlier studies. In particular, IT employment growth is enhanced by industrial diversity (Jacobs externalities) and by plant size (economies of scale). At the same time, LLMAs with higher IT concentrations are associated with lower employment growth rates. As a robustness check, quantile regression analysis is performed. This additional set of results reveals that the role of agglomeration forces is different across IT growth levels.