IDEAS home Printed from https://ideas.repec.org/p/zbw/tuedps/118.html
   My bibliography  Save this paper

Firm heterogeneity, labour marketing pooling, and the formation of local labour markets

Author

Listed:
  • Stahl, Konrad O.
  • Walz, Uwe

Abstract

We investigate the simultaneous impact of output and input market imperfections on the characteristics and size of regional economic activity. Firms, producing imperfect Substitutes, face product specific demand shocks which translate into firm-specific shocks. The more different the products are the less correlated the shocks. Then, larger regions provide a better hedge for firms. With heterogeneity on the output side labour demand of firms tends to become also more heterogenous, leading to higher retraining costs for workers in the case of a job loss. Since adjustment costs prove to be higher in larger regions, workers demand higher wages there, imposing thereby higher labour costs on firms. We analyze this trade-off and ask for the resulting firm characteristics in different regions, the interregional wage dispersion, as well as the impact on the regional distribution of economic activity.

Suggested Citation

  • Stahl, Konrad O. & Walz, Uwe, 1997. "Firm heterogeneity, labour marketing pooling, and the formation of local labour markets," Tübinger Diskussionsbeiträge 118, University of Tübingen, School of Business and Economics.
    • Handle: RePEc:zbw:tuedps:118
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/104820/1/tdb118.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Helsley, Robert W. & Strange, William C., 1990. "Matching and agglomeration economies in a system of cities," Regional Science and Urban Economics, Elsevier, vol. 20(2), pages 189-212, September.
    2. Topel, Robert H, 1986. "Local Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 111-143, June.
    3. Kim, Sunwoong, 1989. "Labor Specialization and the Extent of the Market," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 692-705, June.
    4. Kim, Sunwoong, 1990. "Labor heterogeneity, wage bargaining, and agglomeration economies," Journal of Urban Economics, Elsevier, vol. 28(2), pages 160-177, September.
    5. Kim, Sunwoong, 1991. "Heterogeneity of labor markets and city size in an open spatial economy," Regional Science and Urban Economics, Elsevier, vol. 21(1), pages 109-126, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Stahl, Konrad O. & Walz, Uwe, 2001. "Will there be a concentration of alikes? The impact of labor market structure on industry mix in the presence of product market shocks," HWWA Discussion Papers 140, Hamburg Institute of International Economics (HWWA).
    2. Duranton, Gilles & Puga, Diego, 2004. "Micro-foundations of urban agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 48, pages 2063-2117, Elsevier.
    3. Jan K. Brueckner & Jacques-FranÁois Thisse & Yves Zenou, 2002. "Local Labor Markets, Job Matching, and Urban Location," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(1), pages 155-171, February.
    4. Zenou, Yves, 2009. "Search in cities," European Economic Review, Elsevier, vol. 53(6), pages 607-624, August.
    5. Tse, Chung-Yi, 2010. "Thick market externalities in a spatial model," Regional Science and Urban Economics, Elsevier, vol. 40(2-3), pages 92-105, May.
    6. K. Bruce Newbold & W. Mark Brown, 2012. "Testing and Extending the Escalator Hypothesis: Does the Pattern of Post-migration Income Gains in Toronto Suggest Productivity and/or Learning Effects?," Urban Studies, Urban Studies Journal Limited, vol. 49(15), pages 3447-3465, November.
    7. Amend, Elke & Herbst, Patrick, 2002. "Human capital formation under product market uncertainty," ERSA conference papers ersa02p092, European Regional Science Association.
    8. Marcus Berliant & Tomoya Mori, 2017. "Beyond urban form: How Masahisa Fujita shapes us," International Journal of Economic Theory, The International Society for Economic Theory, vol. 13(1), pages 5-28, March.
    9. Arup Mitra, 2011. "Urbanization in India: Evidence on Agglomeration Economies," Working Papers id:4394, eSocialSciences.
    10. Sato, Yasuhiro, 2001. "Labor Heterogeneity in an Urban Labor Market," Journal of Urban Economics, Elsevier, vol. 50(2), pages 313-337, September.
    11. Sukkoo Kim, 2006. "Division of Labor and the Rise of Cities: Evidence from U.S. Industrialization, 1850-1880," NBER Working Papers 12246, National Bureau of Economic Research, Inc.
    12. Dusan Paredes Araya & Tomothy M Komarek, 2013. "Spatial Income Inequality in Chile and the Rol of Spatial Labor Sorting," Documentos de Trabajo en Economia y Ciencia Regional 46, Universidad Catolica del Norte, Chile, Department of Economics, revised Apr 2013.
    13. Theodore Papageorgiou, 2022. "Occupational Matching and Cities," American Economic Journal: Macroeconomics, American Economic Association, vol. 14(3), pages 82-132, July.
    14. Cai, Xiaoming & Gautier, Pieter & Wolthoff, Ronald, 2024. "Spatial Search," CEPR Discussion Papers 18858, C.E.P.R. Discussion Papers.
    15. Kim, Sukkoo, 2005. "Industrialization and urbanization: Did the steam engine contribute to the growth of cities in the United States?," Explorations in Economic History, Elsevier, vol. 42(4), pages 586-598, October.
    16. Abdel-Rahman, Hesham M. & Wang, Ping, 1995. "Toward a general-equilibrium theory of a core-periphery system of cities," Regional Science and Urban Economics, Elsevier, vol. 25(4), pages 529-546, August.
    17. Marcus Berliant & Yves Zenou, 2014. "Labor Differentiation and Agglomeration in General Equilibrium," International Regional Science Review, , vol. 37(1), pages 36-65, January.
    18. Alessia Matano & Paolo Naticchioni, 2016. "What Drives The Urban Wage Premium? Evidence Along The Wage Distribution," Journal of Regional Science, Wiley Blackwell, vol. 56(2), pages 191-209, March.
    19. Sato, Yasuhiro & Thisse, Jacques-Francois, 2007. "Competing for capital when labor is heterogeneous," European Economic Review, Elsevier, vol. 51(8), pages 2054-2079, November.
    20. Martin Andersson & Hans Lööf, 2011. "Agglomeration and productivity: evidence from firm-level data," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 46(3), pages 601-620, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:tuedps:118. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/wftuede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.