Labour mobility, skill-relatedness and new plant survival across different development stages of an industry

Abstract

Labour mobility is often considered a crucial factor for regional development. However, labour mobility is not good per se for local firms. There is increasing evidence that labour recruited from skill-related industries has a positive effect on plant performance, in contrast to intra-industry labour recruits. However, little is known about which types of labour are recruited in different stages of the evolution of an industry, and whether that matters for plant performance. This paper attempts to fill these gaps in the literature using linked employee–employer data at the plant level for manufacturing and services industries in the Netherlands for the period 2001–2009. Our study focuses on the effects of different types of labour recruits on the survival of new plants. We show that the effects of labour recruits from the same industry and from skill-related and unrelated industries on plant survival vary between different stages of the evolution of an industry. We also find that inter-regional labour flows do not affect new plant survival. JEL classification: R11, R12, O18