Marshallian labor market pooling: evidence from Italy

Abstract

This paper employs a unique Italian data source to take a comprehensive approach to labor market pooling. It jointly considers many different aspects of the agglomeration labor market relationship, including turnover, learning, matching, and hold up. It also considers labor market pooling from the perspective of both workers and firms and across a range of industries. The paper reports a general positive relationship of turnover to local population density, which is consistent with theories of agglomeration and uncertainty. The paper also finds evidence of onthejob learning that is consistent with theories of labor pooling, labor poaching, and hold up. In addition, the paper provides evidence consistent with agglomeration improving job matches. However, the labor market pooling gains that we measure are small in magnitude and seem unlikely to account for a substantial share of the agglomeration benefits accruing to worker and firms.