Varying size and shape of spatial units: Analysing the MAUP through agglomeration economies in the case of Germany

Abstract

When an analysis over a specific geographic area is performed, the way that area is divided into regions can affect the outcome of the analysis. Results obtained based on different geographic units can be conflicting. This issue is known as the Modifiable Areal Unit Problem (MAUP). The objective of this paper is to understand the extent to which the regional setting influences the results of an analysis with spatially aggregated variables, with a focus on agglomeration effects, in the case of Germany. Relying on a sample of manufacturing firms over 7 years we estimate a fixed effects model to explain the firm-specific total factor productivity in dependence of region-based agglomeration variables. We simulate 1000 regional settings of Germany on three scales and overtake thereby some characteristics of the administrative units, which are used as the baseline. We infer that the spatial scale and shape matter in the case of Germany.