Productivity advantage of large cities for creative industries

Abstract

This paper examines the productivity advantage of large cities for creative industries (CIs) in China. Using Chinese firm‐level data for CIs from 2012 to 2014, we find that agglomeration economies, rather than firm selection, determine the difference between the productivity distributions of CIs in large and small cities. There are heterogeneous effects of agglomeration economies, with stronger impacts on productive firms and firms in broadcasting and TV & film. We also find that the productivity advantage of large cities for CIs is stronger when the cities have better communication and transportation infrastructure. Our results imply that the efficacy of place‐based policies for developing CIs depends on local infrastructure.