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Labour pooling as a source of agglomeration: An empirical investigation

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  • Henry G. Overman

    ()
    (London School of Economics and CEPR)

  • Diego Puga

    ()
    (IMDEA Social Sciences, Universidad Carlos III de Madrid, and CEPR)

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 Info

Paper provided by Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales in its series Working Papers with number 2008-05.

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Date of creation: 23 Jun 2008
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Publication status: Published in Agglomeration Economics, edited by Edward L. Glaeser, 133-150. Chicago, IL: University of Chicago Press, April 2010
Handle: RePEc:imd:wpaper:wp2008-05

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Keywords: labour market pooling; spatial concentration;

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