Spatial agglomeration, Global Value Chains, and productivity. Micro-evidence from Italy and Spain

We investigate the relationship between spatial agglomeration and firms' labor productivity in Italy and Spain, examining firm-level heterogeneity in Global Value Chain positioning. We analyze a sample of 4025 manufacturing firms during the period from 2010 to 2014 and employ a shift-share instrumental variable approach. We find that agglomeration has a positive effect on labor productivity for suppliers but not for final firms.