Papers in Evolutionary Economic Geography

February 3, 2016

# 16.03 The workforce of pioneer plants

Ricardo Hausmann, Frank Neffke

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Is labor mobility important in technological diffusion? We address this question by asking how plants assemble their workforce if they are industry pioneers in a location. By definition, these plants cannot hire local workers with industry experience. Using German social-security data, we find that such plants recruit workers from related industries from more distant regions and local workers from less-related industries. We also show that pioneers leverage a low-cost advantage in unskilled labor to compete with plants that are located in areas where the industry is more prevalent. Finally, whereas research on German reunication has often focused on the effects of east-west migration, we show that the opposite migration facilitated the industrial diversication of eastern Germany by giving access to experienced workers from western Germany.

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