Labor-Force Heterogeneity as a Source of Agglomeration Economies

Results of this study show that a heterogeneous labor force serves to attract new food manufacturing investment. We conduct analysis for SIC 20, Food and Kindred Product Manufacturing, and disaggregate analysis on all nine three-digit SIC food industries. Heterogeneity variables are a significant factor in nearly all specifica-tions. We also examine which factors create the greatest increases in the expected number of new establishments. Areas with a high degree of labor heterogeneity are found to have large advantages. Labor heterogeneity is among the most important factors attracting food manufacturing to urban areas over rural areas. Key words: agglomeration externalities, business location determinants, food manu-facturing, labor heterogeneity, rural developmen