Labor Pooling, Labor Poaching, and Spatial Clustering

Pierre-Philippe Combes and Gilles Duranton

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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 help reduce costs) and the costs of labour poaching (i.e., loss of some key workers to competition and a higher wage bill to retain the others). We explore this tradeoff in a duopoly game. Depending on market size, on the degree of horizontal differentiation between goods, and on worker heterogeneity in terms of knowledge transfer cost, we characterise the strategic choices of firms regarding locations, wages, poaching and prices. Our results show that co-location, although it is always efficient in our framework, is not in general the non-cooperative equilibrium outcome.

Keywords: Labour pooling; Labour poaching; Firm clustering; Agglomeration (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (17)

Published in Regional Science and Urban Economics, 2006, 36 (1), pp.1-28. ⟨10.1016/j.regsciurbeco.2005.06.003⟩

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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 (2001)
Working Paper: Labour Pooling, Labour Poaching and Spatial Clustering (2001)
Working Paper: Labor pooling, labor poaching and spatial clustering (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00754183

DOI: 10.1016/j.regsciurbeco.2005.06.003

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