Agglomeration Economies within IT-Producing and IT-Consuming Industries in U.S. Regions

We extend the agglomeration economies literature (1) by comparing the effects on productivity of geographic concentrations in IT activity and all other activity and (2) by distinguishing between the effects of IT-producing and IT-using sectors on productivity. Four measures of agglomeration for U.S. states and counties are tested in a total labor productivity model which includes each region's capital-output ratio and the quality of the labor supply. The cross section estimates yield mixed results. We find evidence of an effect of concentration of IT on productivity for states level and find stronger effects at the county level from IT-producing concentrations