Elsevier

Geoforum

Volume 83, July 2017, Pages 39-49
Geoforum

Job-related mobility and plant performance in Sweden

https://doi.org/10.1016/j.geoforum.2017.04.019Get rights and content

Abstract

This paper uses a Swedish micro-dataset containing 2,696,909 hires during the period 2002–2006 to assess the impact of job-related mobility on plant-level performance. The analysis classifies new recruits according to their work experience and level of formal qualification, as well as by the region of origin and of destination. New hires are divided into graduates and experienced workers and between high- and low-educated. The results point towards the importance of acknowledging both the experience and the skills of new recruits. The greatest benefits are related to hiring new workers from outside the region where the plant is located. The analysis also stresses the importance of geography, with plants in metropolitan regions gaining the most from labour mobility, while the benefits of mobility for plants in smaller, more peripheral regions are more diverse and dependent on both the type and origin of new workers.

Introduction

The role institutional structures play in localized learning processes and, consequently, in regional development, have been the object of close scrutiny (e.g. Storper, 1997, Maskell and Malmberg, 1999, Rodríguez-Pose, 2013). While local linkages have dominated studies about localized learning (Storper and Venables, 2004), attention is increasingly being paid to how external connections and networks shape the diffusion of knowledge (Bathelt et al., 2004). A consensus is emerging indicating that both regional attributes and extra-local linkages are crucial to the understanding of spatial differences in economic development (Saxenian and Sabel, 2008), and that job-related migration is key in this process (Fratesi, 2014).

Despite the agreement on the relevance of job mobility, the exact importance of mobility for productivity and growth remains controversial. Some research has highlighted that job-related mobility matters but that it plays second fiddle to economies of scale and scope (Eriksson and Lindgren, 2009). Under certain circumstances labour mobility may even have negative consequences by undermining on-the-job training through labour poaching (McCann and Simonen, 2005, Combes and Duranton, 2006). In addition, labour flows may not always produce the intended effect in terms of knowledge diffusion and assimilation. If the cognitive and geographical proximity between the old and the new firm is too large, job mobility will be zero-sum, failing to have an economic impact (Boschma et al., 2009, Eriksson, 2011) and may even contribute to regional job destruction (Boschma et al., 2014).

Given these potentially contradictory effects, analysing empirically the impact of labour mobility on plant performance is of capital importance. The aim of this paper is to shed light on these issues by directly tackling a number of questions about the extent to which plant performance depends on local or extra-local sources of skills.

More specifically, the paper aims to expand our understanding of the impact of labour mobility on performance in three ways. First, it makes an explicit distinction between types of job-related mobility according to work-experience. It distinguishes between inflows of graduates (inexperienced) and those of experienced workers to assess the extent to which hiring recent graduates matters in relation to experience (poaching workers from other firms). We thereby contribute to the discussion of how universities and other higher education institutions shape regional economic development (Faggian and McCann, 2006, Abel and Deitz, 2012). Second, we pay special attention to the difference between low- and high-skilled labour flows in different types of regions. This represents a new dimension, as previous studies (e.g., Boschma et al., 2009) have primarily focused on the mobility of the high-skilled (generally bachelor’s degree or higher) to the detriment of the mobility of workers with lower levels of qualification (Maskell et al., 1998, Eriksson and Lindgren, 2009). Third, since both the supply and demand of labour differ over the urban hierarchy – with large and diverse regions often considered capable of absorbing greater numbers of migrants (Partridge and Rickman, 2003) and having the greatest potential for effective matching (Puga, 2010) – we look at the geography of mobility in order to examine the extent to which plant performance is affected by the knowledge and skills acquired by workers in areas with different endowments of firms and of external economies. We focus, in particular, on the functionality and size of the region of origin and destination of the migrant. This is important as labour flows across different types of regions may reinforce already existing regional disparities (Faggian and McCann, 2009).

To achieve these aims, we resort to a longitudinal micro-database containing matched information on all workers (e.g. workplace, education, working experience, place of residence) and on the features of all plants (e.g., sector, location, performance) in Sweden between 2002 and 2006. Regression analysis is then applied to examine how the origin and type of almost 2.7 million new hires influence plant performance (defined as annual productivity growth) for a total of 69,932 Swedish plants.

The remainder of the paper is structured as follows: In Section 2 the literature on labour mobility is linked to the agglomeration literature when discussing the role of local and extra-local externalities. Section 3 presents the Swedish data and the variables and introduces the model used to estimate plant performance. The main findings are presented in Section 4. Section 5 concludes.

Section snippets

Geographical mobility and firm-level performance

Since at least the development of the endogenous growth theory, human capital has been regarded as a main – if not the main – driver of regional development (e.g., Lucas, 1988). It is assumed to be the leading vehicle of transmission of knowledge and a key facilitator of knowledge spillovers and localized learning (Malmberg and Power, 2005). Large concentrations of human capital generate and diffuse knowledge which can be transformed into productivity and growth by firms. Following Marshall

Data

The empirical analysis is based on a comprehensive dataset consisting of official matched employer-employee registers obtained from Statistics Sweden. This detailed data source contains information on all individuals (age, income, education, and other personal characteristics) linked to features of plants for all plants or establishments1 in Sweden

Analysis of results

Job-to-job mobility in Sweden has in the past been comparatively moderate. This was mainly a consequence of institutional arrangements favouring wage equality in the provision of long-term posts with relatively high salaries linked to the accumulated firm experience. The general consensus between labour unions and employers was that workers staying in the same firm would benefit not only in terms of income, but be also protected from lay-offs by seniority rules. However, as noted by Holmlund

Concluding remarks

In this paper we have assessed the link between labour mobility and changes in plant-level performance using a micro-dataset covering a total of 2,696,909 job changes in Sweden during the period between 2002 and 2006. The novelty of the analysis consists in looking at different categories of job-related mobility, considering both experienced workers and graduates (defined as those finding a job in the two years after graduation). Newly-hired workers have also been classified as graduates or

Funding

The research leading to this paper has benefited from financial support by the European Research Council (FP7/2007-2013) ERC grant agreement no. 269868, by the Riksbankens Jubilieumsfond (P13-1004:1), and the research program ‘Mobility, Transformation and Regional Growth’ at Umeå University.

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