Explaining the spatial dimension of firm productivity by territorial resources: the case of Wallonia

This communication aims to present a part of my PhD research about the spatial dimension of firm productivity conducted under the supervision of Pr. Jean-Marie Halleux (ULiège) and Dr. Isabelle Reginster (IWEPS). To address the relations between firm productivity and territorial resources, we have developed a two-step model based on a panel of Walloon firms. The first step consisted of total factor productivity estimation with the Olley & Pakes method. The second step is a model explaining the TFP estimation by variables reflecting territorial resources thanks to a robust OLS estimation.
Regarding territorial resources, we have specifically investigated the Walloon post-industrial context with a focus on labour market, agglomeration economies and the political interest dedicated to infrastructures.
Main results suggest the key role of local labour market, the lack of agglomeration economies in main Walloon urban area and the reconsideration of planning and infrastructures policies. Among main results to discuss, we suggest that the quality of matching on Walloon local labour markets is an important factor to apprehend spatial variability of firm productivity. The quality of matching would be lower than expected due to structural unemployment and concurrence of Brussels and Luxembourg labour markets. Our model suggests a negative impact on firm TFP.
Main conclusions suggest that the Walloon firm productivity is impacted two main territorial features. First, agglomeration diseconomies are larger than agglomeration economies in main Walloon urban areas. Second, the cross-border metropolitan areas would have a negative impact due to concurrence on local labour markets. Any comment about these conclusions is welcome!