Agglomeration effects in a developing economy: evidence from Turkey

Abstract

Abstract I estimate the role of agglomeration economies and other local factors on productivity differences across Turkish provinces, which are some of the highest seen in OECD countries. Using a novel administrative dataset and historical instruments to deal with estimation concerns, I find that the elasticity of productivity to density is higher than in developed countries. Moreover, using an individual panel at the regional level, I find weak sorting effects for workers, contrasting with evidence from developed countries. These results suggest that urbanization patterns could be operating differently in developing countries.