Labour Market Externalities and Regional Growth in Sweden: The Importance of Labour Mobility between Skill-Related Industries

Abstract

Boschma R., Eriksson R. H. and Lindgren U. Labour market externalities and regional growth in Sweden: the importance of labour mobility between skill-related industries, Regional Studies. This study investigates the relationship between labour market externalities and regional growth based on real labour flows. In particular, it tests for the importance of labour mobility across so-called skill-related industries between 435 four-digit industries within 72 Swedish functional regions (1998–2002). Both the fixed-effect models and generalized method of moments (GMM) estimates demonstrate that a strong intensity of intra-regional labour flows between skill-related industries impacts positively on regional productivity growth, but less so on employment growth. Labour mobility between unrelated industries tends to dampen regional unemployment growth while a high degree of intra-industry labour flows is only found to be associated with rising unemployment.