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Labor Pooling in R&D Intensive Industries

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  • Gerlach, Heiko
  • Rønde, Thomas
  • Stahl, Konrad O.

Abstract

We investigate firms’ incentives to locate in the same region to gain access to a large pool of skilled labor. Firms engage in risky R&D activities and thus create stochastic product and implied labor demand. Agglomeration in a cluster is more likely in situations where the innovation step is large and the probability for a firm to be the only innovator is high. When firms cluster, they tend to invest more and take more risk in R&D compared to spatially dispersed firms. Agglomeration is welfare maximizing, because expected labor productivity is higher and firms choose a more effcient, technically diversified portfolio of R&D projects at the industry level.

Suggested Citation

  • Gerlach, Heiko & Rønde, Thomas & Stahl, Konrad O., 2005. "Labor Pooling in R&D Intensive Industries," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 64, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  • Handle: RePEc:trf:wpaper:64
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    References listed on IDEAS

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    Cited by:

    1. Shahid Yusuf & Kaoru Nabeshima, 2009. "Growth through Innovation : An Industrial Strategy for Shanghai," World Bank Other Operational Studies 18613, The World Bank.
    2. Henkel, Joachim & Rønde, Thomas & Wagner, Marcus, 2015. "And the winner is—Acquired. Entrepreneurship as a contest yielding radical innovations," Research Policy, Elsevier, vol. 44(2), pages 295-310.
    3. Carlino, Gerald & Kerr, William R., 2015. "Agglomeration and Innovation," Handbook of Regional and Urban Economics, Elsevier.
    4. Andini, Monica & de Blasio, Guido & Duranton, Gilles & Strange, William C., 2013. "Marshallian labour market pooling: Evidence from Italy," Regional Science and Urban Economics, Elsevier, vol. 43(6), pages 1008-1022.
    5. Garcia Pires, Armando J., 2013. "Home market effects with endogenous costs of production," Journal of Urban Economics, Elsevier, vol. 74(C), pages 47-58.
    6. Combes, Pierre-Philippe & Duranton, Gilles, 2006. "Labour pooling, labour poaching, and spatial clustering," Regional Science and Urban Economics, Elsevier, vol. 36(1), pages 1-28, January.
    7. Agrawal, Ajay & Kapur, Devesh & McHale, John & Oettl, Alexander, 2011. "Brain drain or brain bank? The impact of skilled emigration on poor-country innovation," Journal of Urban Economics, Elsevier, vol. 69(1), pages 43-55, January.
    8. repec:bof:bofrdp:urn:nbn:fi:bof-201512111472 is not listed on IDEAS
    9. Ajay Agrawal, 2014. "Diaspora Networks, Knowledge Flows and Brain Drain," WIPO Economic Research Working Papers 15, World Intellectual Property Organization - Economics and Statistics Division.
    10. Henkel, Joachim & Rønde, Thomas & Wagner, Marcus, 2010. "And the Winner Is--Acquired: Entrepreneurship as a Contest with Acquisition as the Prize," CEPR Discussion Papers 8147, C.E.P.R. Discussion Papers.
    11. Glaeser, Edward L. & Rosenthal, Stuart S. & Strange, William C., 2010. "Urban economics and entrepreneurship," Journal of Urban Economics, Elsevier, vol. 67(1), pages 1-14, January.
    12. Kameshwari Shankar & Suman Ghosh, 2013. "A Theory of Worker Turnover and Knowledge Transfer in High-Technology Industries," Journal of Human Capital, University of Chicago Press, vol. 7(2), pages 107-129.
    13. Crass, Dirk & Rammer, Christian & Aschhoff, Birgit, 2016. "Geographical clustering and the effectiveness of public innovation programs," ZEW Discussion Papers 16-083, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    14. Maksim Belitski & Julia Korosteleva, 2011. "Entrepreneurship and cities: evidence from the post-communist world," ERSA conference papers ersa11p288, European Regional Science Association.
    15. Karima Kourtit & Peter Nijkamp & Mark D. Partridge & Hans Lööf & Pardis Nabavi, 2013. "Increasing returns to smart cities," Regional Science Policy & Practice, Wiley Blackwell, vol. 5(2), pages 255-262, June.
    16. Gerlach, Heiko A. & Rønde, Thomas & Stahl, Konrad O., 2008. "Labor Pooling in R&D Intensive Industries," ZEW Discussion Papers 08-074, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    17. Maksim Belitski & Julia Korosteleva, 2011. "Entrepreneurship and Cities: Evidence from the Post-communist World," WIFO Working Papers 397, WIFO.
    18. Belitski Maksim, 2011. "Driving Urban Economic Growth – Evidence from Transition Economies," EERC Working Paper Series 11/10e, EERC Research Network, Russia and CIS.

    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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