Dartboard Tests for the Location Quotient

In this paper we reinterpret the location quotient, the commonly employed measure of regional industrial agglomeration, as an estimator derived from Ellison and Glaeser’s (1997) dartboard framework. This approach provides a theoretical foundation on which to build statistical tests for the measure. With a simple application, we show that these tests provide valuable information about the accuracy of the location quotient. The tests are relatively easy to implement using regional employment and establishment data.