Diverse regions with clustered jobs outperform specialists on wages
Swedish researchers found that workers earn more in economically diverse regions where jobs cluster around related skills—contradicting conventional wisdom that skill specialization drives growth. The finding suggests regional development policy should balance diversity with strategic clustering rather than pursuing narrow specialization.
Originaltitel: Job relatedness, local skill coherence and economic performance: a job postings approach
<p>The local presence and composition of skills is commonly thought to have enormous implications foreconomic development. Yet, skills and the relations between them are notoriously difficult to pinpointand measure. We develop a method that uses information available in Swedish job postings tomeasure the skill-relatedness of jobs and the skill-coherence of local economies. Our skill-relatednessmeasure can be assumed to be exogenous to local economic outcomes such as wages, productivity andlabour mobility. We corroborate some previous research findings and show that workers tend to switchbetween related jobs and that local economies are on average skill-coherent. However, less coherentlocal economies are associated with higher average wages and productivity. Local economies whereworkers switch between related jobs though enjoy higher average wages. In all, this points to thebenefit of local labour market clusters within more diverse regions. We conclude that job postingsprovide a wealth of information on the skill-foundations of local development. A job-level skill-relatedness matrix accompanies the paper.</p>