Testing for labour pooling as a source of agglomeration economies: Evidence for labour markets in England and Wales

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  • This work was based on data from the Annual Survey of Hours and Earnings (ASHE) and the Annual Respondents Database (ARD), produced by the Office for National Statistics (ONS) and supplied by the Secure Data Service at the UK Data Archive. The data are Crown Copyright and reproduced with the permission of the controller of HMSO and Queen's Printer for Scotland. The use of the data in this work does not imply the endorsement of ONS or the Secure Data Service at the UK Data Archive in relation to the interpretation or analysis of the data. This work uses research datasets which may not exactly reproduce National Statistics aggregates.

Abstract

This paper generates new evidence for England and Wales on the importance of labour pooling as a source of agglomeration economies. Estimates of worker and firm productivity are obtained from longitudinal worker and firm micro-data and used to test the hypothesis that denser labour markets increase the quality of the matching between employees and employers across labour markets. Our findings provide evidence supportive of a positive relationship between the quality of the employee-employer matching and the economic size of labour markets.

Resumen

Este trabajo aporta a Inglaterra y Gales nuevas pruebas sobre la importancia de la puesta en común de la mano de obra, como fuente de economías de aglomeración. Las estimaciones de la productividad del trabajador y la empresa se obtienen de micro-datos longitudinales sobre trabajadores y empresas y se utilizaron para poner a prueba la hipótesis de que los mercados laborales más densos aumentan la calidad del emparejamiento entre empleados y empleadores en los mercados de trabajo. Nuestros resultados aportan pruebas que apoyan una relación positiva entre la calidad del emparejamiento empleado-empleador y el tamaño económico de los mercados laborales.

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