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Title:Will there be a concentration of alikes? The impact of labor market structure on industry mix in the presence of product market shocks PDF Logo
Authors:Stahl, Konrad O.
Walz, Uwe
Issue Date:2001
Series/Report no.:HWWA Discussion Paper 140
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.
Subjects:local labor market
product market shocks
industry structure
imperfect competition
JEL:L1
J4
R3
Document Type:Working Paper
Appears in Collections:HWWA Discussion Paper, Hamburgisches Welt-Wirtschafts-Archiv

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