Labour Pooling as a Source of Agglomeration: An Empirical Investigation

20 Pages Posted: 18 Feb 2009

See all articles by Henry G. Overman

Henry G. Overman

London School of Economics (LSE) - Department of Geography and Environment; Centre for Economic Policy Research (CEPR)

Diego Puga

IMDEA Social Sciences; University of Toronto - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Date Written: February 2009

Abstract

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.

Keywords: labour market pooling, spatial concentration

JEL Classification: R12, R30

Suggested Citation

Overman, Henry G. and Puga, Diego, Labour Pooling as a Source of Agglomeration: An Empirical Investigation (February 2009). CEPR Discussion Paper No. DP7174, Available at SSRN: https://ssrn.com/abstract=1345701

Henry G. Overman (Contact Author)

London School of Economics (LSE) - Department of Geography and Environment ( email )

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Centre for Economic Policy Research (CEPR)

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Diego Puga

IMDEA Social Sciences ( email )

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Spain

University of Toronto - Department of Economics ( email )

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