Labour mobility and plant performance: on the (dis)similarity between labour‐ and capital‐intensive sectors for knowledge diffusion and productivity

Abstract

In this article we analyse differences between capital‐ and labour‐intensive sectors with regard to the impact of workforce composition and labour mobility on plant performance. By the use of geo‐referenced longitudinal employer–employee data on a micro level, we analyse labour flows between plants within and between labour market regions. The analysis is carried out using weighted least squares (WLS) regression analysis combined with additional variance analysis (ANOVA). The results show that there are differences between the sectors with regard to both in‐house workforce composition and type of skill inflow. A high degree of related knowledge in the in‐house workforce has a strong positive effect on plant performance in the labour‐intensive sectors. The analysis of labour inflow indicates that knowledge in the capital‐intensive sectors is localized – only intra‐regional labour flows give rise to increased plant productivity. In the labour‐intensive sectors, the geographic and cognitive dimensions complement one another; similar knowledge needs to be non‐local in order to be beneficial to plant performance, and unrelated knowledge mainly contributes to plant productivity growth when it is local.