Labour Pooling, Labour Poaching and Spatial Clustering

Gilles Duranton and Pierre-Philippe Combes

No 2975, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: When firms cluster in the same local labour market, they face a trade-off between the benefits of labour pooling (i.e., access to workers whose knowledge helps reduce costs) and the costs of labour 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: Labour pooling; Labour poaching; Firm clustering; Agglomeration (search for similar items in EconPapers)
JEL-codes: J60 L13 R32 (search for similar items in EconPapers)
Date: 2001-09
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Citations: View citations in EconPapers (24)

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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: Labor Pooling, Labor Poaching and Spatial Clustering (2001)
Working Paper: Labor pooling, labor poaching and spatial clustering (2001)
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