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Labor market pooling and human capital investment decisions

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  • Amend, Elke
  • Herbst, Patrick

Abstract

"Of the typically cited agglomeration advantages labor market pooling receives strong empirical support - yet remains under-explored theoretically. This paper presents a model of human capital formation in an imperfectly competitive, pooled local labor market with heterogeneous workers and firms. Firms produce for a competitive output market with differing technologies, thus requiring diverse skills. In anticipation of firm behavior, workers choose between specializing into specific skills and accumulating general human capital. While labor market pooling provides static efficiency gains, our approach also suggests that there are long-term effects: under a diversified industrial structure, industry-specific shocks lead to a labor market pooling advantage which raises the incentive for workers to acquire both general and specific human capital. This will not only strengthen a region's capability to adapt to change but will also contribute to higher growth." (Author's abstract, IAB-Doku) ((en))

Suggested Citation

  • Amend, Elke & Herbst, Patrick, 2008. "Labor market pooling and human capital investment decisions," IAB Discussion Paper 200804, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  • Handle: RePEc:iab:iabdpa:200804
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    References listed on IDEAS

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    Cited by:

    1. Anne Otto & Dirk Fornahl, 2010. "Origins of Human Capital in Clusters: Regional, Industrial and Academic Transitions in Media Clusters in Germany," Chapters,in: Emerging Clusters, chapter 5 Edward Elgar Publishing.

    More about this item

    Keywords

    regionaler Arbeitsmarkt; Ballungsraum; Regionalverflechtung; Arbeitsmarktstruktur; Region; Humankapital; Bildungsinvestitionen; Allgemeinbildung; Fachkenntnisse; Qualifikationsstruktur; matching; Arbeitslosigkeit; Beschäftigungseffekte; Regionalökonomie; Bildungsökonomie;

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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