Labor Pooling in R&D Intensive Industries

Gerlach, Heiko and Rønde, Thomas and Stahl, Konrad O. (September 2005): Labor Pooling in R&D Intensive Industries. SFB/TR 15 Discussion Paper No. 64

Abstract

We investigate firms’ incentives to locate in the same region to gain access to a large pool of skilled labor. Firms engage in risky R&D activities and thus create stochastic product and implied labor demand. Agglomeration in a cluster is more likely in situations where the innovation step is large and the probability for a firm to be the only innovator is high. When firms cluster, they tend to invest more and take more risk in R&D compared to spatially dispersed firms. Agglomeration is welfare maximizing, because expected labor productivity is higher and firms choose a more effcient, technically diversified portfolio of R&D projects at the industry level.

• Item Type: Paper (Discussion Paper)
• Collections: Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems; Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > C2 - Intellektuelles Eigentum, Aneignung von Innovationserträgen und Innovationswettbewerb
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: L13, O32, R12
• Language: English