A non-parametric test for industrial specialization

We introduce a non-parametric microdata based test for industrial specialization and apply it to a single urban area. Our test employs establishment densities for specific industries, a population counterfactual, and a new correction for multiple hypothesis testing to determine the statistical significance of specialization across both places and industries. Results highlight patterns of specialization that are extremely varied, with downtown places specializing in a number of service sector industries, while suburban places specialize in both manufacturing and service industries. Business service industries are subject to more specialization than non-business service industries while the manufacturing sector contains the lowest representation of industries with specialized places. Finally, we compare results for specialization with localization and show that both measures contribute to our understanding of industry and place specific agglomerative forces.