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Labor Pooling as a Source of Agglomeration: An Empirical Investigation

In: Agglomeration Economics

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  • Henry G. Overman
  • Diego Puga

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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Suggested Citation

  • Henry G. Overman & Diego Puga, 2010. "Labor Pooling as a Source of Agglomeration: An Empirical Investigation," NBER Chapters,in: Agglomeration Economics, pages 133-150 National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:7981
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    More about this item

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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