Regional diversification and labour market upgrading: local access to skill-related high-income jobs helps workers escaping low-wage employment

Elekes, Zoltán and Baranowska-Rataj, Anna and Eriksson, Rikard (2023) Regional diversification and labour market upgrading: local access to skill-related high-income jobs helps workers escaping low-wage employment. CAMBRIDGE JOURNAL OF REGIONS ECONOMY AND SOCIETY, 16 (3). pp. 417-430. ISSN 1752-1378

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Abstract

This article investigates how the evolution of local labour market structure enables or constrains workers as regards escaping low-wage jobs. Drawing on the network-based approach of evolutionary economic geography, we employ a detailed individual-level panel dataset to construct skill-relatedness networks for 72 functional labour market regions in Sweden. Subsequent fixed-effect panel regressions indicate that increasing density of skill-related high-income jobs within a region is conducive to low-wage workers moving to better-paid jobs, hence facilitating labour market upgrading through diversification. While metropolitan regions offer a premium for this relationship, it also holds for smaller regions, and across various worker characteristics.

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