Agglomeration economies and skill matching: evidence from UK regions

Authors: Carlo Corradini*, Birmingham Business School, Enrico Vanino, LSE
Topics: Economic Geography
Keywords: agglomeration, skills, matching, relatedness
Session Type: Paper
Day: 4/4/2019
Start / End Time: 1:10 PM / 2:50 PM
Room: Diplomat Room, Omni, West
Presentation File: No File Uploaded

Better skill matching has long been proposed as one of the key advantages of agglomeration economies alongside knowledge spillovers. Yet, support for this has remained largely theoretical so far. This paper aims to contribute to the literature by offering novel empirical evidence on the relationship between agglomeration economies and skill matching. Controlling for unobserved time-invariant firm-level heterogeneity and other region-industry idiosyncratic effects across a longitudinal dataset for the period 2008-2014 in the UK, our analysis reveals a positive direct effect of agglomeration externalities on skill matching and a negative effect on skill shortage vacancies. Results are robust to different measures of agglomeration as well as weighting skill metrics across related industries and proximate regions.

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