Urban economists hypothesize that industrial diversity matters for urban growth and development, but metrics for empirically testing this relationship are limited to simple concentration metrics (e.g. location quotient) or summary diversity indices (e.g. Gini, Herfindahl). As shown by recent...

Ellison and Glaeser's (1997) index of geographical concentration distinguishes between natural advantages and spillovers as a source of industrial agglomeration, but the well-known 'observational equivalence' means little is known about the relative importance of these. This paper uses the...