1. Bruce Domazlicky Southeast Missouri State University

2.  The Retail Trade Sector in the U.S.  Agglomeration Economies  Efficiency and Productivity Growth  Model  Model Results  Relationship between Agglomeration Economies & Efficiency  Relationship between Agglomeration Economies & Productivity Growth

3.  Important Contributor to Standard of Living in an Urban Area  Supplies Goods & Services that Residents Demand  Important Source of Jobs to Urban Residents

4.  Computerization: Bar Scanning Universal in U.S.  Improved Inventory Tracking  Increased Average Size of Retail Establishments  Increased Concentration in Urban Areas at expense of Rural Areas

5.  Localization Economies: economies that arise when firms in the same industry locate near each other: pooling of labor force, development of industry suppliers, diffusion of ideas (technological spillovers)  Urbanization Economies: economies that arise from locating in an urban area: access to markets, labor supply, financial and other specialized services, low communication costs

6.  Does efficiency in the retail trade sector increase with urban size?  Does productivity growth in the retail trade sector increase with urban size?  What is relationship between agglomeration economies and efficiency in the retail trade sector?  What is relationship between agglomeration economies and productivity growth in the retail trade sector?

7.  Data Envelopment Analysis is used to measure efficiency levels  Productivity Growth is measured using the Malmquist Productivity Index

8.  348 Metropolitan Statistical Areas in U.S.  3 Variables: Output, Labor, Capital  Output and Labor from the Bureau of Economic Analysis: Http://www.bea.gov Http://www.bea.gov  Capital computed using variation on method by Garofalo and Yamarik (REStat, 2002)

11. VariableMeanStd. DeviationMaximumMinimum Output (millions) 1865.2174497.21752536.429107.286 Labor42892.14689281.8369773284491 Capital (billions) 1.6414.22346.0690.066 Table 1. Variable Statistics

12. YearMeanStd. DeviationMinimumMaximum 20010.71370.09610.44441 20020.73660.09380.48781 20030.72010.09000.44151 20040.70060.09190.42491 20050.69950.09770.41031 20060.69390.09840.41851 20070.67810.09380.41011 All 7 Years0.70610.09090.43391 Table 2. Efficiency Estimates

13. RegionAverage Efficiency New England0.7272 Mid-Atlantic0.6869 Great Lakes0.6892 Plains0.6448 Southeast0.7280 Southwest0.6797 Rocky Mountain0.6784 Far West0.7556 Table 4. Average Efficiency by Region

14. SizeAverage Efficiency ScoreNumber Less than 100,0000.662623 100,001-200,0000.6695133 200,001-500,0000.7081102 500,001-1,000,0000.735345 1,000,001-2,000,0000.778921 More than 2,000,0000.823024 Table 6. Average Efficiency Scores by Metropolitan Size

15. ProductivityMeanStd. DeviationMinimumMaximum TFP Growth Rate 1.25300.09511.01731.8110 Efficiency Change 0.95240.07320.76441.3878 Technical Change 1.31590.02521.21871.3633 Table 3. Productivity Estimates, 2001-2007

16. RegionTFPEfficiency ChangeTechnical Change New England1.22200.92081.3269 Mid-Atlantic1.25990.95561.3188 Great Lakes1.20240.92291.3038 Plains1.20550.91951.3114 Southeast1.27300.96871.3146 Southwest1.24080.93121.3332 Rocky Mountain1.31060.99101.3227 Far West1.27740.96961.3174 Table 5. Average Productivity Growth by Region

17. SizeTFP Growth RateEfficiency ChangeTechnical Change Less than 100,0001.32721.01651.3057 100,001-200,0001.25930.95871.3136 200,001-500,0001.25180.95231.3150 500,001-1,000,0001.23870.93941.3187 1,000,001-2,000,0001.22760.92291.3301 More than 2,000,0001.20100.90711.3243 Table 7. Average Productivity Growth by Metropolitan Size

18. Regression Results

19.  AVEEFF: Average Efficiency  URBAN: Urbanization Economies, log of average population  LOCAL: Localization economies, relative share of retail trade output  EDUC: Percentage of population with at least a Bachelor’s Degree

20. VariableCoefficientStd. Errort-Statistic Constant0.06840.07690.89 URBAN0.04290.004210.23 LOCAL0.06530.02163.03 EDUC0.00220.00063.58 Adj. R-Squared0.538F-Statistic8.77 Table 8. Efficiency Regression Dependent Variable: AVEEFF No. of Obs.: 348

21. Regression Results

22.  PROD: Productivity growth, 2001-2007  TC: Growth rate of technical change, 2001- 2007  EC: Growth rate of efficiency change, 2001- 2007

23. VariablePRODTCEC Constant 1.4714 (13.86) 1.2547 (62.76) 1.1681 (14.71) URBAN -0.0164 (-2.82) 0.0048 (3.60) -0.0162 (-3.63) LOCAL 0.0173 (0.66) 0.0094 (1.22) 0.0060 (0.30) EDUC 0.0007 (0.92) 0.0001 (0.75) 0.0003 (0.62) Adj. R-Squared0.240.170.21 F-Statistic3.112.372.80 Table 9. Productivity Regressions No. of Obs.: 348 (Numbers in parentheses are t-statistics.)

24.  Efficiency in urban areas increase with city size & relative importance of sector  Productivity change is due solely to technical change  Efficiency change declines as urban size increases-indication of “catching-up”?