Abstract:
his study is to investigate the short- and long-run causal relationshipbetween agglomeration (localization and urbanization) economies and labor productivity in the manufacturing sector of 28 Iranian provinces over an 11-year period, 2001–2011. Fully Modified Ordinary Least Squares (FMOLS) method was used to estimate our long-run panel data model. The empirical findings suggested that localization and urbanization economies had a positive and statistically significant effect on labor productivity in the long-run equilibrium. Then, the Generalized Method of Moments (GMM) was employed to examine Granger Causality between each pair of variables. The results revealed a bidirectional short-run Granger causality between localization economies and labor productivity. Additionally, a bidirectional short- run causal relationship was found between urbanization economies and labor productivity for all the manufacturing industries. In the long run, however, there seemed to be bidirectional causality between localization economies and productivity and also between urbanization economies and labor productivity in each manufacturing industry.
Machine summary:
"Table 3: The Results of Westerlund Panel Cointegration Test between LLP and LLOC Constant Constant and Industry Statistic Value Robust p Robust Manufacture of beverages, food and tobacco products Manufacture of textiles, wearing apparel and leather and related products Manufacture of wood and of products of wood and cork and furniture Manufacture of paper and paper products, Printing and reproduction of recorded media Manufacture of chemical Manufacture of other non-metallic mineral products Manufacture of basic metals Manufacture of machinery and equipment and metal products Other manufacturing value Value p value Ga -3.
Table 4: The Results of Westerlund Panel Cointegration Test between LLP and LU Constant Constant and trend industry Statistic Robust P- value Value Robust P-value Manufacture of beverages, food and tobacco products Manufacture of textiles, wearing apparel and leather and related products Manufacture of wood and of products of wood and cork and furniture Manufacture of paper and paper products, Printing and reproduction of recorded media Manufacture of chemical Manufacture of other non-metallic mineral products Manufacture of basic metals Manufacture of Gt -1.
5. Conclusion This study has benefitted from the granger causality test for panel data model in order to determine the direction of causality between agglomeration economies (localization and urbanization) and labor productivity.
Finally, panel error correction models were used to examine short- and long-run Granger causality between localization (or urbanization) economies and labor productivity.
Granger causality test results showed a strong bidirectional causal relationship between localization economies and labor productivity in all manufacturing industries in both the short-and long-run.
Furthermore, based on panel Granger causality test results, there was a bidirectional causal relationship between urbanization and labor productivity in all the manufacturing industries in both short- and long-run."