Investigating the Spatial Distribution of Manufacturing Employment

Abstract

An extensive body of research examines the relationship between transportation and economic activity in a region; however, many of the studies ignore the possible spatial interdependencies between regions. As a result, these studies may over- or underestimate the role that transportation plays on the economic activity of a region. This paper contributes to the literature by exploring the relationship between the supply of transportation infrastructure and manufacturing employment concentration through a model that accounts for the spatial structure of the data at the zip code level. The modeling approach, which is demonstrated with a case study in Indiana, accounts for spillovers across areas by using a spatial autoregressive model with autoregressive disturbances. The results indicate that the high concentration of manufacturing employment in Indiana has been strongly associated with proximity to industrial parks, low commuting time, a higher percentages of firms with more than 100 employees, lower highway density, and proximity to intermodal facilities. The results of this study could benefit metropolitan or rural planning organizations and economic development groups that aim to design policies or plans to attract manufacturing activity to their regions.