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Labor Pooling as a Source of Agglomeration: An Empirical Investigation

In: Agglomeration Economics

  • Henry G. Overman
  • Diego Puga

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

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This chapter was published in:
  • Edward L. Glaeser, 2010. "Agglomeration Economics," NBER Books, National Bureau of Economic Research, Inc, number glae08-1, March.
  • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 7981.
    Handle: RePEc:nbr:nberch:7981
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    9. Gary S. Becker & Kevin M. Murphy, 1994. "The Division of Labor, Coordination Costs, and Knowledge," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 299-322 National Bureau of Economic Research, Inc.
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