Discussion Paper Details

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Title: Labour Pooling As a Source of Agglomeration: An Empirical Investigation

Author(s): Henry G Overman and Diego Puga

Publication Date: February 2009

Keyword(s): labour market pooling and spatial concentration

Programme Area(s): International Trade and Regional Economics

Abstract: We provide empirical evidence on the role of labour market pooling in determining the spatial concentration of UK manufacturing establishments. This role arises because large concentrations of employment iron out idiosyncratic shocks and improve establishments' ability to adapt their employment to good and bad times. We measure the likely importance of labour pooling by calculating the fluctuations in employment of individual establishments relative to their sector and averaging by sector. Our results show that sectors whose establishments experience more idiosyncratic volatility are more spatially concentrated, even after controlling for a range of other industry characteristics that include a novel measure of the importance of localized intermediate suppliers.

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Bibliographic Reference

Overman, H and Puga, D. 2009. 'Labour Pooling As a Source of Agglomeration: An Empirical Investigation'. London, Centre for Economic Policy Research.