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Labor Pooling, Labor Poaching and Spatial Clustering

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Author Info
Pierre-Philippe Combes
Gilles Duranton

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Abstract

When firms cluster in the same local labor market, they face a trade-off between the benefits of labor pooling (i.e., access to workers whose knowledge help reduce costs) and the costs of labor poaching (i.e., loss of some key workers to competition and the indirect effect of a higher wage bill to retain the others). We explore this trade-off in a duopoly game. Depending on market size and on the degree of horizontal differentiation between products, we characterize the strategic choices of firms regarding locations, wages, poaching and prices. Our results show that co-location, although it is always efficient, is not in general the equilibrium outcome.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number 0510.

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Date of creation: Sep 2001
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Handle: RePEc:cep:cepdps:0510

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Related research
Keywords: Labor pooling labor poaching firm clustering agglomeration

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Find related papers by JEL classification:
J60 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - General
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
R32 - Urban, Rural, and Regional Economics - - Production Analysis and Firm Location - - - Other Production and Pricing Analysis

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Giorgio Brunello & Francesca Gambarotto, 2006. "Do Spatial Agglomeration and Local Labor Market Competition Affect Employer - Provided Training? Evidence from the UK," "Marco Fanno" Working Papers 0018, Dipartimento di Scienze Economiche "Marco Fanno". [Downloadable!]
    Other versions:
  2. Guido De Blasio & Sabrina Di Addario, 2002. "Labor market pooling: evidence from Italian industrial districts," Temi di discussione (Economic working papers) 453, Bank of Italy, Economic Research Department. [Downloadable!]
  3. Montserrat Vilalta-Bufi, 2007. "Labor mobility and Inter-industry Wage Variation," DEGIT Conference Papers c012_024, DEGIT, Dynamics, Economic Growth, and International Trade. [Downloadable!]
  4. Fosfuri, Andrea & Rønde, Thomas, 2002. "High-tech clusters, technology spillovers, and trade secret laws," Working Papers 07-2002, Copenhagen Business School, Department of Economics. [Downloadable!]
  5. Brunello, Giorgio & Gambarotto, Francesca, 2004. "Agglomeration Effects on Employer-Provided Training: Evidence from the UK," IZA Discussion Papers 1055, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  6. M Manacorda & Enrico Moretti, 2002. "Intergenerational Transfers and Household Structure. Why Do Most Italian Youths Live With Their Parents?," CEP Discussion Papers 0536, Centre for Economic Performance, LSE. [Downloadable!]
  7. Christoph Alsleben, 2005. "Spatial agglomeration and product market competition," Discussion Papers in Economics 05_04, University of Dortmund, Department of Economics. [Downloadable!]
  8. Fosfuri, Andrea & Rønde, Thomas, 2003. "High-Tech Clusters, Technology Spillovers and Trade Secret Laws," CEPR Discussion Papers 4130, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  9. Andrea Fosfuri & Thomas Rønde, 2003. "High-tech clusters, technology spillovers, and trade secret laws," CIE Discussion Papers 2003-02, University of Copenhagen. Department of Economics. Centre for Industrial Economics. [Downloadable!]
  10. 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!]
    Other versions:
  11. Stéphane VIROL (IERSO-IFReDE-GRES), 2006. "Three dimensions of regional integration process in Europe: an approach by spatial econometrics (In French)," Working Papers of GRES - Cahiers du GRES 2006-16, Groupement de Recherches Economiques et Sociales. [Downloadable!]
  12. Sue Fernie & Helen Gray, 2002. "Its a Family Affair: the Effect of Union Recognition and Human Resource Management on the Provision of Equal Opportunities in the UK," CEP Discussion Papers 0525, Centre for Economic Performance, LSE. [Downloadable!]
  13. Andres Almazan & Adolfo De Motta, 2004. "Firm Location and the Creation and Utilization of Human Capital," Econometric Society 2004 North American Winter Meetings 68, Econometric Society. [Downloadable!]
  14. Sylvain Barde, 2008. "Knowledge spillovers and the equilibrium location of vertically linked industries: the return of the black hole," Documents de Travail de l'OFCE 2008-05, Observatoire Francais des Conjonctures Economiques (OFCE). [Downloadable!]
  15. Richard Dickens & Alan Manning, 2002. "Has The National Minimum Wage Reduced UK Wage Inequality?," CEP Discussion Papers 0533, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
  16. Sabrina Di Addario & Eleonora Patacchini, 2005. "Wages and the City. The Italian case," Economics Series Working Papers 243, University of Oxford, Department of Economics. [Downloadable!]
  17. Danny Quah, 2002. "Spatial Agglomeration Dynamics," CEP Discussion Papers 0521, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
  18. Antonio Guarino & Piero Tedeschi, 2006. "Endogenous Knowledge Spillovers and Labor Mobility in Industrial Clusters," Working Papers 20060507, Università degli Studi di Milano-Bicocca, Dipartimento di Statistica. [Downloadable!]
  19. Andres Almazan & Adolfo de Motta & Sheridan Titman, 2003. "Firm Location and the Creation and Utilization of Human Capital," NBER Working Papers 10106, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  20. Giles Duranton & Diego Puga, 2003. "Micro-Foundations of Urban Agglomeration Economies," NBER Working Papers 9931, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  21. Alan Manning, 2001. "Monopsony and the Efficiency of Labour Market Interventions," CEP Discussion Papers 0514, Centre for Economic Performance, LSE. [Downloadable!]
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  22. Christoph Alsleben, 2004. "The Downside of Knowledge Spillovers: An Explanation for the Dispersion of High-tech Industries," Discussion Papers in Economics 04_01, University of Dortmund, Department of Economics. [Downloadable!]
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