Knowledge economy, internal migration, and local labour markets

Brugiavini, Agar, Di Cataldo, Marco and Romani, Giulia (2025) Knowledge economy, internal migration, and local labour markets. Labour Economics, 97. ISSN 0927-5371

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Abstract

The spatial concentration of knowledge-intensive activities can generate multiplicative effects at the local level. This paper examines how employment growth in knowledge-intensive and tradable sectors affects wage, days worked, and internal migration of non-tradable workers in Italy. We leverage matched employer-employee data (2005–2019) to track individuals across jobs and locations. Our empirical strategy combines a two-step estimation with a shift-share instrument to disentangle the roles of worker sorting and local spillovers. We find that knowledge sector expansion increases the number of days worked locally and attracts non-tradable workers. It also raises nominal wages, but only when sorting is not accounted for, suggesting selective inflows of more productive workers into knowledge hubs. However, rising local living costs offset nominal wage gains, leading to lower real wages.

Item Type:	Article
Additional Information:	© 2025 The Author(s)
Divisions:	Geography and Environment
Subjects:	H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HC Economic History and Conditions
JEL classification:	J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J23 - Employment Determination; Job Creation; Demand for Labor; Self-Employment J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies > J61 - Geographic Labor Mobility; Immigrant Workers R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade R - Urban, Rural, and Regional Economics > R2 - Household Analysis > R23 - Regional Migration; Regional Labor Markets; Population
Date Deposited:	11 Nov 2025 12:00
Last Modified:	11 Nov 2025 12:00
URI:	http://eprints.lse.ac.uk/id/eprint/130106

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