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Labour Pooling as a Source of Agglomeration: An Empirical Investigation

Listed author(s):
  • Henry Overman
  • Diego Puga

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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File URL: http://www.spatialeconomics.ac.uk/textonly/SERC/publications/download/sercdp0006.pdf
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Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0006.

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Date of creation: Sep 2008
Handle: RePEc:cep:sercdp:0006
Contact details of provider: Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

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  1. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 49, pages 2119-2171 Elsevier.
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  12. Marshall, Alfred, 1890. "The Principles of Economics," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number marshall1890.
  13. Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon, 2008. "Spatial Wage Disparities: Sorting Matters!," Post-Print halshs-00754296, HAL.
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  17. Audretsch, David B & Feldman, Maryann P, 1996. "R&D Spillovers and the Geography of Innovation and Production," American Economic Review, American Economic Association, vol. 86(3), pages 630-640, June.
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