Labor Pooling, Labor Poaching and Spatial Clustering

By Pierre-Philippe Combes, Gilles Duranton. 2006

318 citations recorded by the source corpus.

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

Subfields: Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/8aee05a5318fd36fc42514ae4cc83d0c6b9dab1e

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Citations in the corpus

Does the Mobility of R&D Labor Increase Innovation? (2015, background): “There are opposing effects of labor mobility on the joint profit of the firms (Combes and Duranton, 2006; Fosfuri and Rønde, 2004).”
Labour Market Externalities and Regional Growth in Sweden: The Importance of Labour Mobility between Skill-Related Industries (2014, background): “A high intensity of job-hopping may form a threat for firms to lose their key personnel to competitors, and it may lower the incentive for firms to train and upgrade the skills of their employees (KIM and MARSCHKE, 2005; COMBES and DURANTON, 2006; FALLICK et al., 2006).”
Agglomeration and Innovation (2014, background): “While labor market pooling may reduce firm costs, leading to greater profit, competition for workers and worker turnover can have the opposite effect (Matouschek and Robert-Nicoud, 2005; Combes and Duranton, 2006; Gerlach et al., 2009). Labor market pooling exposes firms to poaching of vital workers”
Brain drain or brain bank? The impact of skilled emigration on poor-country innovation (2008, background): “Combes and Duranton (2006) develop a model in which labor pooling has two opposing effects: It allows greater access to knowledge produced by other firms, but the potential for one's own workers to be poached forces firms to pay higher wages to retain their workforce.”
Localized Knowledge Spillovers and Patent Citations: A Distance-Based Approach (2014, background): “Such dispersion of citing inventors may arise, for instance, when the benefits of their pooling is dominated by the costs of their poaching from firms’ perspectives (Combes & Duranton, 2006). paper version, Murata et al., 2011, for further discussion).”
Spatial concentration and plant-level productivity in France (2011, methodology): “Combes and Duranton (2006) also show that firms, when they cluster in the same local labor market, face a trade-off between the benefits of labor pooling (i.e., access to workers whose knowledge helps reduce costs) and the costs of labor poaching (i.e., loss of some key workers due to competition…”
Local Industrial Conditions and Entrepreneurship: How Much of the Spatial Distribution Can We Explain? (2009, background): “Labor may be the most important input into any new firm, and entrepreneurship is quite likely to be driven by the availability of a suitable labor force (e.g., Combes and Duranton, 2006; Dahl and Klepper, 2007).”
What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns (2010, unknown): “Entrepreneurs may also locate in existing agglomerations due to the suitable labor force ( e.g., Pierre-Philippe Combes and Duranton 2006; Michael S. Dahl and Steven Klepper 2007 .”
The Empirics of Agglomeration Economies (2014, methodology): “Combes et al. (2011) details these endogeneity concerns.”
How does labour mobility affect the performance of plants? The importance of relatedness and geographical proximity (2008, background): “These benefits of labour pooling are often believed to exceed the downsides of labour mobility (i.e. labour poaching) that reduce the incentive of firms to invest in their own employees (Kim and Marschke, 2005; Combes and Duranton, 2006; Fallick et al., 2006).”