Labor Pooling, Labor Poaching and Spatial Clustering

Pierre-Philippe Combes and Gilles Duranton

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: When firms cluster in the same local labor market, they face a trade-off between the benefits of labor pooling (i.e., access to workers whose knowledge help reduce costs) and the costs of labor poaching (i.e., loss of some key workers to competition and the indirect effect of a higher wage bill to retain the others). We explore this trade-off in a duopoly game. Depending on market size and on the degree of horizontal differentiation between products, we characterize the strategic choices of firms regarding locations, wages, poaching and prices. Our results show that co-location, although it is always efficient, is not in general the equilibrium outcome.

Keywords: Labor pooling; labor poaching; firm clustering; agglomeration (search for similar items in EconPapers)
JEL-codes: J60 L13 R32 (search for similar items in EconPapers)
Date: 2001-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Related works:
Journal Article: Labour pooling, labour poaching, and spatial clustering (2006)
Working Paper: Labor Pooling, Labor Poaching, and Spatial Clustering (2006)
Working Paper: Labour Pooling, Labour Poaching and Spatial Clustering (2001)
Working Paper: Labor pooling, labor poaching and spatial clustering (2001)
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