Location of leisure: the New Economic Geography of leisure services

Understanding more about the geographic location of leisure services is an important quest for research. For a long time now in developed economies, almost all employment growth is occurring within the service sector. In this sector, leisure services are fast growers. This means that the location of these services is important for economic growth and for employment opportunities of local market areas. Regional policy-makers time and again highlight these sectors as future engines of growth. This paper investigates the role of local demand in determining the availability and the scale of various types of leisure services. The analysis is motivated by observed regularities that indicate large and persistent interregional differences in the location and growth of leisure services. Based on a New Economic Geography framework, we investigate the role of local and regional demand for the size of leisure services in geographically separate markets in Sweden. We use data for 290 Swedish municipalities for the period 2002–2013 and run year-municipality fixed-effects regressions. Our main findings suggest a strong dependency on local demand, and less on the demand originating from other regions.