Spatial Distribution of Entrepreneurs and Skilled Workers: Empirical Evidence from India (Job Market Paper)

I estimate the contribution of vertical linkage (the linkage between input suppliers and output producers) in the spatial agglomeration of industries by studying the location patterns of Information Technology (IT) firms and Technical Colleges that supply workers to these firms. I use two novel instruments to causally identify the effect of firm location on college location, and the effect of college location on firm location. I find that a 1% increase in IT employment opportunities in the local labor market leads to a 1.05 % increase in number of colleges locating in a district. In the other direction, I find that a 1% increase in available skilled labor in a local labor market leads to a 4.6 % increase in number of firms locating in that district. My current work explores possible mechanisms that can explain this.