Agglomeration and regional labour markets

Abstract

There is no such thing as ‘the labour market’. This term is usually used to describe a simplified combination of very different delimited markets, both regionally and in terms of employee qualifications. Different labour markets can develop quite differently. This insight was underlined by studies presented at the DIW Berlin workshop. Thus, the empirical studies are virtually unanimous in showing that those with higher qualifications benefit particularly from a concentration of economic activity. That investment in human capital is worthwhile particularly in regionally concentrated labour markets is, conversely, demonstrated by the theory. The workshop presentations have, nevertheless, also led to a large number of new questions. For example, the basis of each of the various countries’ experiences needs to be clarified. Among the most important tasks to be solved is undoubtedly also the quantification of the influence emanating from the different agglomeration factors. Can economic policy lessons be learned from the workshop contributions? The heterogeneity of labour markets, as has become evident from the different presentations, suggests that labour market policy would be ill advised to rely solely on an overall observation of a labour market seen as an entity. In light of the questions raised, especially as a result of the empirical studies, it nevertheless seems premature to consider conclusions that go any further as anything more than hypotheses.