Firms that locate in close proximity to each other experience benefits. The foundations of these agglomeration externalities have been laid by Marshall already in the nineteenth century. Since the work of Ellison et al. (2010), there has been a turning point in the agglomeration literature. By measuring the extent of coagglomeration for industry pairs, authors have been able to examine the strength of all three Marshallian externalities: input-output relationships, large labour pools and knowledge spill-overs. Whereas the literature continues with the debate of which externality is the dominant rationale for industries to coagglomerate, this paper focusses on its effects on industry size dynamics in the Netherlands. Since industries must be coagglomerating for a reason, it can be expected that the extent of coagglomeration affects industry performance. This paper examines the relationship between coagglomeration and employment growth for manufacturing industries and knowledge-intensive business services (KIBS). By using and adjusting the mathematical approach of Ellison et al. (2010), we find support for a positive relationship between coagglomeration and employment growth in the Netherlands. However, due to sectoral-, temporal- and spatial factors, there is strong heterogeneity in the effects on industry size dynamics. In addition to differences between manufacturing industries and KIBS, we observe strong temporal effects of the financial crisis and differences for the Randstad and other areas in the Netherlands. In the end, these results emphasize the importance of both Marshall (1890) and Jacobs (1969) in the assessment of (co)agglomeration.

Additional Metadata
Thesis Advisor F.G. van Oort
Persistent URL
Series Business Economics
R.F.C. Wentzel. (2019, November 20). The extent and effects of industry coagglomeration in the Netherlands. Business Economics. Retrieved from