What drives employment growth of Canadian businesses? A fresh look at agglomeration economies when competition and diversity matter

Cong Wang, Bodo Steiner

Research output: Chapter in Book/Report/Conference proceedingConference contributionResearchpeer-review


This study investigates indicators of external scale economies in Canada for the period 2004-11. Accounting for firm-level external scale forces, we explore the extent to which external scale economies impact employment growth. Our analysis focuses on three factors: the impact of external scale economies accounting for Marshallian specialization and Jacobs diversity, competition by industry, and related and unrelated firm varieties in terms of employment and sales. Results accounting for non-linearity between employment growth and agglomeration suggest that in the short run, during the period 2004-2011, local competition and diversity in Canada have had a positive impact on employment growth, while the effect of Marshallian specialization is negative; during the period of the global financial crisis and immediately thereafter (2008-2011) however, the magnitude of the positive effect of competition and diversity is lower, while the negative effect of specialization on employment growth is also smaller and rather insignificant. In the long run, a peak threshold for specialization and diversity is found, while a lower bound threshold for competition can be identified. Moreover, diversity is found an insignificant employment growth determinant in the agricultural sector, while concentration contributes insignificantly to employment growth in the industry sector.
Original languageEnglish
Title of host publicationProceedings of Uddevalla Symposium 2014
Subtitle of host publicationGeography of growth, the frequency and consequences of entrepreneurship and innovations in regions of varying density
EditorsI. Bernhard
Place of PublicationUddevalla, Sweden
PublisherUniversity West, Sweden
Number of pages28
ISBN (Print)978-91-87531-02-6
Publication statusPublished - 2014
Externally publishedYes
EventUddevalla Symposium : Geography of growth - The frequency, nature and consequences of entrepreneurship and innovation in regions of varying density - Uddevalla, Uddevalla, Sweden
Duration: 12 Jun 201414 Jun 2014
Conference number: 17th


ConferenceUddevalla Symposium
Internet address


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