Local labour markets, job displacement and agglomeration economies

Abstract

This dissertation focuses on the structure of workers’ local labour markets and the resulting economic consequences. A local labour market can be described as a regional area that is relatively self-contained in terms of residence and work activity. The analyses focus on three topics. Firstly, the workers’ spatial and labour response to job displacement following firm bankruptcy: to what extent is the spatial structure of homes and jobs relevant for workers’ post-displacement outcomes? Secondly, the introduction of a flow-based cluster algorithm, flowbca, in the statistical software package Stata. The main purpose of flowbca is to define local labour markets based on relational data of commuting flows from place of home to place of work. Thirdly, the consequences of the differences between workers’ local labour markets: what is the role of the structure of local labour markets and the level of regional aggregation in the agglomeration benefits for employment and wages? These questions lead to an incisive conclusion on local labour markets and the way we study them.