Scandinavian Working Papers in Economics

Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

No 209: LABOR MOBILITY, KNOWLEDGE DIFFUSION AND REGIONAL GROWTH

Per Thulin ()
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Per Thulin: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden

Abstract: This paper investigates the relationship between inter-firm labor mobility and regional productivity growth. Previous studies have shown that density is positively correlated with growth. I claim that it is not density in itself, but rather the attributes associated with it that drives economic growth. One such attribute is the increased possibility for labor mobility and knowledge diffusion that follows when firms and individuals locate in close proximity to each other. This hypothesis is tested using a matched employer-employee dataset where regional labor mobility is instrumented with density. The result shows that labor mobility increases regional growth rates.

Keywords: Labor mobility; regional growth; agglomeration economies

JEL-codes: J62; R11; R23

41 pages, December 18, 2009

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