Regional Occupational and Industrial Structure: Does One Imply the Other?

Abstract

The product/profit cycle and new international division of labor theories hypothesize that establishments in a single industry may be undertaking different activities in different locations: innovative and developmental activities will be anchored in regions of origin, while more routine production and service functions will be dispersed to lower cost and downstream consuming regions. Disparities in occupational composition offer a test of these theories. In this article, we test whether a region’s occupational structure can be read off of its industrial structure. Using a data set created for eleven California metropolitan areas for 1997, we explore the extent to which the occupational mix within a specific metropolitan industry is dissimilar to the mix found for that same industry in other metros. We find that estimating a metro’s occupational mix by assuming that its industries mirror the national occupational structure for those industries often provides a reasonable approximation especially for aggregate occupational categories. However, this does not hold for a cluster of innovative industries and occupations that we tested, specifically in high-tech research and development and information technology activities. In such cases, pursuing industrial targeting will not achieve the same consequence as pursuing occupational targeting.