Will There Be a Concentration of Alikes? The Impact of Labor Market Structure on Industry Mix in the Presence of Product Market Shocks

Konrad Stahl and Uwe Walz (uwalz@econ.uni-frankfurt.de)

No 26362, Discussion Paper Series from Hamburg Institute of International Economics

Abstract: We analyze determinants of regional industry mix and focus especially on the influence of labor market characteristics. By combining a labor market pooling argument with an argument involving the cost of switching a worker from one firm to another, we show that in the presence of product market shocks there exists an interesting trade-off for the concentration of firms of the same industry in one region. Firms belonging to different industries are hedged against industry-specific shocks if they settle in the same region, but face higher switching costs (retraining costs for workers moving from one firm to another). In addition, with a given supply of labor there is an additional rationing effect affecting the location decisions of firms. Against the background of these trade-offs we analyze the resulting location decisions of firms in a two-regions-two-industry-four-firm framework. We analyze the impact of different parameters on the location choice of firms.

Keywords: Industrial Organization; Labor and Human Capital (search for similar items in EconPapers)
Pages: 32
Date: 2001
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
https://ageconsearch.umn.edu/record/26362/files/dp010140.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:hwwadp:26362

DOI: 10.22004/ag.econ.26362

Access Statistics for this paper

More papers in Discussion Paper Series from Hamburg Institute of International Economics Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search (aesearch@umn.edu).