Co-worker networks, labour mobility and productivity growth in regions

Abstract

The mobility of workers is an important source of regional dynamics, but the effect of mobility on regional productivity growth is not straightforward, as some firms tend to win while others lose from mobility. In the present paper, we argue that the co-worker networks across plants that are established by labour moves are important for both local learning opportunities and job matching quality and should hence facilitate regional growth. We therefore propose a new homophily-biased perspective on coworker network creation and show that it suits geographical analyses better than random networks do. Moreover, panel vector autoregression models provide systematic evidence that an increase in co-worker network density is positively related to regional productivity growth. This is found to be important even when only ties across plants that are not directly linked by labour mobility are included.