Kiel Working Papers, Kiel Institute for World Economics
No 1660:
Closing the Gap between Absolute and Relative Measures of Localization, Concentration or Specialization
Frank Bickenbach, Eckhardt Bode and Christiane Krieger-Boden
Abstract: This paper solves one of the puzzles in the analysis of
regional and industrial distributions of economic activity, the discrepancy
between absolute and relative measures. It shows that the difference
between an absolute and a relative Theil index of localization can be
expressed in terms of absolute and relative concentration and
specialization measures. This helps understand and explore why absolute and
relative measures frequently evolve in opposite directions. The paper shows
for the EU-15 and for UK manufacturing that this divergence originates
mainly from the industrial dimension and is largely a statistical artifact
inherited from the characteristics of industry classifications
Keywords: Localization, Concentration, Specialization, Theil index; (follow links to similar papers)
JEL-Codes: C43,; R12; (follow links to similar papers)
13 pages, November 2010
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