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Labor pooling, labor poaching and spatial clustering

Combes, Pierre-Philippe and Duranton, Gilles (2001) Labor pooling, labor poaching and spatial clustering. CEPDP, 510. Centre for Economic Performance, London School of Economics and Political Science, London, UK. ISBN 075301498X

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Identification Number: 510

Abstract

When firms cluster in the same local labor market, they face a trade-off between the benefits of labor pooling (i.e., access to workers whose knowledge help reduce costs) and the costs of labor poaching (i.e., loss of some key workers to competition and the indirect effect of a higher wage bill to retain the others). We explore this trade-off in a duopoly game. Depending on market size and on the degree of horizontal differentiation between products, we characterize the strategic choices of firms regarding locations, wages, poaching and prices. Our results show that co-location, although it is always efficient, is not in general the equilibrium outcome.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk
Additional Information: © 2001 the authors
Subjects: H Social Sciences > HD Industries. Land use. Labor
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Departments > Geography and Environment
Date Deposited: 29 Jul 2008 12:25
Last Modified: 01 Oct 2010 09:14
URI: http://eprints.lse.ac.uk/id/eprint/20103

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