Labor pooling in R&D intensive industries

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Labor pooling in R&D intensive industries

Author Info

Gerlach, Heiko
Rønde, Thomas
Stahl, Konrad

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Heiko Gerlach

Abstract

We investigate the interplay between firms' R&D decisions and local labor market competition and how this influences equilibrium location choices and welfare. Firms engage in risky R&D activities that generate stochastic product and derived labor demand. We show that firms located in a cluster tend to invest more and take more risk in R&D compared to spatially separated firms. Most interestingly, ex-ante symmetric firms choose asymmetric R&D investments when located in a cluster. This creates an additional welfare benefit from agglomeration, because firms choose a more efficient, diversified portfolio of R&D projects at the industry level.

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Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 65 (2009)
Issue (Month): 1 (January)
Pages: 99-111
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Handle: RePEc:eee:juecon:v:65:y:2009:i:1:p:99-111

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Paper
- Gerlach, Heiko A. & Rønde, Thomas & Stahl, Konrad O., 2005. "Labour Pooling in R&D Intensive Industries," CEPR Discussion Papers 5285, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
- Heiko Gerlach & Thomas Rønde & Konrad O. Stahl, 2005. "Labor Pooling in R&D Intensive Industries," Discussion Papers 64, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
- Heiko A. Gerlach & Thomas Rønde & Konrad Stahl, 2005. "Labor Pooling in R&D Intensive Industries," CIE Discussion Papers 2005-01, University of Copenhagen. Department of Economics. Centre for Industrial Economics. [Downloadable!]

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