Labour mobility and plant performance : The influence of proximity, relatedness and agglomeration

Abstract: The purpose of this thesis is to shed new light on the theorizations discussing the economic benefits of geographical clustering in a space economy increasingly characterized by globalization processes. This is made possible through the employment of a plant-perspective and a focus on how the relative fixity and mobility of labour influence plant performance throughout the entire Swedish economy.  By means of the longitudinal micro database ASTRID, connecting attributes of individuals to features of plants and localities for the whole Swedish economy, the empirical findings indicate that both localization and urbanization economies produce significant labour market externalities and that such inter-plant linkages positively affect plant performance as compared to the partial effects of relative regional specialization and diversification. Moreover, it is also demonstrated that it is necessary both to distinguish how well the external skills retrieved via labour mobility match the existing knowledge base of plants and to determine the geographical dimension of such flows to verify the relative effect of labour market-induced externalities. Finally, it is demonstrated that whereas general urbanization is beneficial within close distance to the plant, the composition of economic activities is more influential at greater distances. In such cases the geographical dimension influences whether plants benefit from being located in similar or different local settings.  In conclusion, it is argued that the circulation of labour skills, created and reproduced through the place-specific industrial setup, is crucial for understanding the mechanisms creating geographical variations in plant performance as compared to other regional conditions often proxied as relative specialization or diversification. This is because the relative fixity of labour tends to create place- and sector-specific skills which by means of their mobility in space are likely to facilitate the recombination of local skills, make the acquirement of non-local skills possible and secure sufficient affinity between economic actors by strengthening other dimensions of proximity – all aspects regarded as crucial to facilitate interactive learning processes and contribute to sustained regional growth.

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