IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Inter-industry linkages in local economies

  • Frank Neffke


  • Martin Henning

We investigate the extent to which a local industry is affected by an overrepresentation of related industries in the local economy. We focus on two types of inter-industry relatedness, namely, the degree to which two industries can employ a similarly skilled labor force and the degree to which two industries are connected in the value chain. We decompose changes in the employment of a local industry into the employment generated or destroyed in incumbent plants and the employment changes due to plant entry and exit. Furthermore, we classify new plants by the type and geographical origins of the plants’ founders. We find that entrepreneurs have a stronger tendency than existing firms to set up plants in local industries that can draw on a strong local presence of labor market and value chain linked industries. The same holds for local founders compared to founders from outside the region. In the second part of the paper, we investigate the relative importance of the two relatedness types and whether the two types reinforce each other. We find that, in general, the growth of old plants and the employment generated in new plants is more strongly associated with the relatedness through the labor market. Moreover, for in new plant formation, the two relatedness types indeed tend to reinforce each other. In fact, local value chain linkages seem to be only important if client and supplier firms can also engage in labor sharing.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa11p1075.

in new window

Date of creation: Sep 2011
Date of revision:
Handle: RePEc:wiw:wiwrsa:ersa11p1075
Contact details of provider: Postal:
Welthandelsplatz 1, 1020 Vienna, Austria

Web page:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Teece, David J., 1982. "Towards an economic theory of the multiproduct firm," Journal of Economic Behavior & Organization, Elsevier, vol. 3(1), pages 39-63, March.
  2. Frank Neffke & Martin Svensson Henning, 2009. "Skill-relatedness and firm diversification," Papers on Economics and Evolution 2009-06, Philipps University Marburg, Department of Geography, revised Oct 2010.
  3. Mercedes Delgado & Michael E. Porter & Scott Stern, 2010. "Clusters and entrepreneurship," Journal of Economic Geography, Oxford University Press, vol. 10(4), pages 495-518, July.
  4. Frank Neffke & Martin Henning & Ron Boschma, 2011. "How Do Regions Diversify over Time? Industry Relatedness and the Development of New Growth Paths in Regions," Economic Geography, Clark University, vol. 87(3), pages 237-265, 07.
  5. Diamond, Charles A & Simon, Curtis J, 1990. "Industrial Specialization and the Returns to Labor," Journal of Labor Economics, University of Chicago Press, vol. 8(2), pages 175-201, April.
  6. Ron Martin & Peter Sunley, 2006. "Path dependence and regional economic evolution," Journal of Economic Geography, Oxford University Press, vol. 6(4), pages 395-437, August.
  7. Richard Florida & Charlotta Mellander & Kevin Stolarick, 2012. "Geographies of scope: an empirical analysis of entertainment, 1970--2000," Journal of Economic Geography, Oxford University Press, vol. 12(1), pages 183-204, January.
  8. Ron Boschma & Koen Frenken, 2009. "Technological relatedness and regional branching," Papers in Evolutionary Economic Geography (PEEG) 0907, Utrecht University, Section of Economic Geography, revised Jun 2009.
  9. Ellison, Glenn & Glaeser, Edward L, 1997. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 889-927, October.
  10. Ron Boschma & Martin Henning & Frank Neffke, 2009. "The impact of aging and technological relatedness on agglomeration externalities: a survival analysis," LSE Research Online Documents on Economics 33498, London School of Economics and Political Science, LSE Library.
  11. William Kerr & Edward Glaeser & Glenn Ellison, 2007. "What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns," Working Papers 07-13, Center for Economic Studies, U.S. Census Bureau.
  12. Koen Frenken & Frank Van Oort & Thijs Verburg, 2007. "Related Variety, Unrelated Variety and Regional Economic Growth," Regional Studies, Taylor & Francis Journals, vol. 41(5), pages 685-697.
  13. Henderson, Vernon & Kuncoro, Ari & Turner, Matt, 1995. "Industrial Development in Cities," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 1067-90, October.
  14. Martin, Philippe & Ottaviano, Gianmarco, 1996. "Growth and Agglomeration," CEPR Discussion Papers 1529, C.E.P.R. Discussion Papers.
    • Martin, Philippe & Ottaviano, Gianmarco I P, 2001. "Growth and Agglomeration," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(4), pages 947-68, November.
  15. Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc.
    • Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992. "Growth in Cities," Scholarly Articles 3451309, Harvard University Department of Economics.
  16. Meric S. Gertler, 2003. "Tacit knowledge and the economic geography of context, or The undefinable tacitness of being (there)," Journal of Economic Geography, Oxford University Press, vol. 3(1), pages 75-99, January.
  17. Ron A. Boschma & Koen Frenken, 2005. "Why is economic geography not an evolutionary science? Towards an evolutionary economic geography," Papers in Evolutionary Economic Geography (PEEG) 0501, Utrecht University, Section of Economic Geography, revised Feb 2005.
  18. Paul Almeida & Bruce Kogut, 1999. "Localization of Knowledge and the Mobility of Engineers in Regional Networks," Management Science, INFORMS, vol. 45(7), pages 905-917, July.
  19. Philip McCann & Jaakko Simonen, 2005. "Innovation, knowledge spillovers and local labour markets," Papers in Regional Science, Wiley Blackwell, vol. 84(3), pages 465-485, 08.
  20. Henri L.F. de Groot & Jacques Poot & Martijn J. Smit, 2008. "Agglomeration Externalities, Innovation and Regional Growth: Theoretical Perspectives and Meta-Analysis," Working Papers in Economics 08/01, University of Waikato, Department of Economics.
  21. Alessandra Faggian & Philip McCann, 2006. "Human capital flows and regional knowledge assets: a simultaneous equation approach," Oxford Economic Papers, Oxford University Press, vol. 58(3), pages 475-500, July.
  22. C. A. Hidalgo & B. Klinger & A. -L. Barabasi & R. Hausmann, 2007. "The Product Space Conditions the Development of Nations," Papers 0708.2090,
  23. Dauth, Wolfgang, 2010. "The mysteries of the trade: employment effects of urban interindustry spillovers," IAB Discussion Paper 201015, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  24. Olav Sorenson, 2003. "Social networks and industrial geography," Journal of Evolutionary Economics, Springer, vol. 13(5), pages 513-527, December.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa11p1075. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gunther Maier)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.