Human capital spillovers in Dutch cities: consumption or productivity?

We study the recursive relationship between the ability of Dutch cities to attract recent graduate human capital to their labour—or housing markets and a city’s skills structure, using a comprehensive dataset and a novel operationalisation strategy. We disentangle production and consumption spillovers by separating out human capital employed in a city’s labour market and human capital present in a city’s resident population, respectively. We do so for both the recent graduates flowing into Dutch cities to find work and a residential location, as well as for the incumbent workers and population. We control for the effects of a city’s skills endowments, its (non-) economic characteristics and those of other relevant cities. We find positive effects of a relatively strong graduate labour market inflow on the share of higher and scientific-level jobs. Production spillovers therefore predominantly occur among the higher skilled. Contrary to the higher educated incumbent population, which appears to prefer high skilled services, recent graduate inflows to residential areas have positive effects on the share of jobs requiring lower and medium skills. Consumption spillovers from graduate residential inflows thus occur between higher and lower skilled.     

The European construction industry and its competitiveness: a construct of the European Commission

The 'European construction industry' is a fiction that tends to obscure its heterogeneous character and to mar studies and policies of the European Commission aimed at improving the internal and external 'competitiveness' of the sector. In order to assess the process of integration in Europe under the impact of its own dynamics as well as Union policies, this paper looks at the dynamics of the sector from three different aspects: as investment, production and labour process. It shows, in particular, the persistent regional and social disparities dividing the industry into separate entities. Political attention tends to focus on a small number of construction companies competing for a few projects which represent the European dimension. Yet, these companies still rely on their respective national bases and local labour from the place where construction is carried out. Persistent divisions between the states are also reflected in the low level of transnational organization of the construction industry. The policy of the European Commission generally ignores these divisions and attempts to establish principles intended to make a whole sector more 'competitive', while its component parts, operating at hugely different levels of productivity, do not even meet on the same market. This paper argues that, instead of trying in vain to introduce a 'knock-out' system of competition in the EU Member States, a targeted approach might help raise productivity in lagging regions and thus improve the basis of competitiveness on global markets.     

On the role of distance for outward FDI

This paper focuses on the estimation of three distance-related effects on outward FDI. (1) Distance harms vertical multinationals, since they engage in trade. (2) It makes non-trading multinationals better off than exporters. (3) This positive effect on horizontal FDI is expected to rise with bilateral parent and host market size. The use of panel data and related econometric methods is highly recommended to avoid parameter bias from endogenous, unobserved, time-invariant effects. A unified estimation approach to assess all three hypotheses then has to rely on instrumental variable techniques for generalized least-squares methods. In the empirical analysis of 1989-1999 bilateral US outward FDI stocks at the industry level, it is shown that testing and accounting for autocorrelation is extremely important for parameter inference. In sum, the paper lends strong support to the theory of horizontally organized multinationals as outlined in Markusen and Venables (J Int Econ 52(2):209–234).     

Where do foreign firms locate in transition countries? An empirical investigation

Firm-level data sets on foreign manufacturing plants in four Central and Eastern European Countries are used in this paper, to trace their location and estimate the determinants of their choice processes. A nested logit model as developed by McFadden (1974) is used in the analysis. A central focus of the analysis is foreign direct investment (FDI) which is a good indicator of where location of foreign investments is made. Several reasons explain the need for mapping the location of FDI. First of all, it facilitates understanding the real competitiveness of regions and countries in providing location advantages able to complement multi-national enterprises’ (MNE) specific advantages. Secondly, it directly shows the distribution of the benefits usually associated with FDI. Finally, an understanding of FDI location decisions is important for policy makers who believe that MNEs may offer a positive contribution to the economic development of disadvantaged areas and thus correct potential regional imbalances. The main results show that sector specific factors affect the choice of the final location. These unobserved characteristics influence both the determinants and the structure of MNEs location choice process. This paper has been written as a part of the Research Network on “The Impact of the European Integration and Enlargement on Regional Structural Change and Cohesion”, financed by the European Commission through the 5th Framework Programme. The authors are grateful to the other members of the Research Consortium and the participants at the international workshop “Modelling the Entrepreneurial and Innovative Space-Economy” organized by the Tinbergen Institute on 22–23 August 2005 for very helpful comments and suggestions provided on an earlier version of this work.     

Does skilled migration foster innovative performance? Evidence from British local areas

What is the effect of an increase in the stock of human capital due to skilled immigration on the innovative performance of recipient economies? Combining firm‐level micro‐data with area‐level labour force information, this paper investigates the impact of skilled international migration inflows on firms' product and process innovation in British local labour market areas. The paper supports the evidence in favour of a causal link between immigration and innovation. Results also show that the nature of the innovative process and the typology of innovative activities performed by local firms play a key role in the relation between immigration and innovation.     

Agglomeration effects and the location of FDI: evidence from French first-time movers

This paper analyses the location choice determinants of French first-time investments in Europe, North America and North Africa. Firm locations are examined on two geographical scales, the national and regional level. The final sample comprises 307 location choices in 27 countries and across 45 regions. Both, location- and firm-specific variables are used for analyzing investment strategies. The results show that higher market demand and cultural proximity to France increase the likelihood of a particular location to be chosen, whereas higher labour cost and a larger distance between a foreign location and the headquarters deter FDI investments. Manufacturing and older companies are more likely to establish their first subsidiary in Eastern Europe. Furthermore, this study examines the extent to which French investors choose foreign locations that already host a significant number of French firms. The results obtained from regressions with various absolute and relative agglomeration measures suggest that French investors are rather attracted by firm cluster in general, or by the unobserved factors that led to the agglomeration in the first place, than by any nation-specific firm cluster.     

Job mobility, residential mobility and commuting: A theoretical analysis using search theory

The decision to move job and the decision to move residence are closely related dynamic discrete choices, as both moves involve a change of commuting distance. This suggests that labour and residential mobility are mutually dependent and should be simultaneously analysed, based on a theory which incorporates these dynamic decisions explicitly. In the present paper, we base our analysis on search theory and choose the point of departure that individuals maximise utility by moving through different labour market and housing market states, while taking into consideration that moving from one state to another is costly. Based on these assumptions, a search model is constructed and the optimality conditions are derived.  One of main conclusions based on the search model is that the effect of factors which cause housing market imperfections (viz. the residential moving costs and the residence arrival rate) have ambiguous effects on he job acceptance and job search behaviour of employed individuals. For some interesting cases however, the effect of the residential moving costs on the job acceptance behaviour can be derived. In contrast, the effect of housing market imperfections on the labour market behaviour of nonemployed persons is determined. We find for example that housing policies which discourage nonemployed persons to move residence (e.g. housing subsidies) also decrease the probability of becoming employed and may therefore unintentionally increase the number of nonemployed persons. Received: December 1997/Accepted: March 1999     

EFFICIENCY OF JOB MATCHING MECHANISMS: A CROSS-NATIONAL COMPARISON

ABSTRACT The purpose of the present paper is to gain insight into the efficiency of the labour market information and job matching mechanisms by means of a cross-national analysis of labour force micro data for the Netherlands and the United States. First, the impact of personal and regional unemployment on the decision to migrate is investigated Second, job search success is evaluated by measuring the impacts of the regional Labour market situation and migration on the tre-employment probabilities of the unemployed in both countries. The result is that the Dutch information system which allows nationwide job search from the home area without migration is superior to the U.S. system of speculative migration.     

Spatial complexity and interactions in the FDI attractiveness of regions

In this study we argue that the capacity of regions to attract FDI is affected by the own‐country effect, which can take two different forms: the first relates to the relative performance of the country of which the region is part (the between‐country effect); the second concerns the relative performance of regions within their own countries (the within‐country effect). By using spatial econometrics techniques we demonstrate that the own country effect exists. However, while the within effect is always positive, the between one may be either positive or negative. This means that successful regions in unsuccessful countries generally enjoy an extra‐FDI premium, while regions in successful countries do not necessarily do so.     

FDI and immigration: a regional analysis

Does immigration affect foreign direct investment? Existing studies on immigration and FDI have all looked at aggregate flows at the national level, arguing that immigrant networks lower the risk of foreign investment through increased information flows and a built in market. However, these national-level studies suffer from identification problems since many of the factors that attract immigrants also attract FDI. This study improves upon identification by looking at the regional distribution of both FDI and immigration from 10 source countries to the 50 US states. Using a unique measure of immigrant network size in each state, I find that immigration is not only positively correlated with FDI, it tends to lead it as well. Comparing a state with an average sized immigrant network to one with a network twice as large, I estimate that the stronger network state will get on average 20 more foreign-owned affiliates opening per year, an effect that is quite persistent over time. On average, more skilled immigrant communities attract more FDI, while the pull effect of immigration on FDI also increases with immigrant ties to native countries and with immigrant influence in local communities. These results suggest that immigration creates a positive externality in foreign investment that must be considered when assessing the costs and benefits of labor mobility.     

Migration behaviour among the unemployed and the role of unemployment benefits

In this paper the migration behaviour of young unemployed people in Sweden is analysed. The migration stream is divided into labour market migration and migration motivated by other reasons. The results show that a larger part of total migration is motivated by reasons other than pure labour market considerations. Explanatory factors have different effects on the two streams. Labour market motivated migration is sensitive to local labour market conditions while migration motivated by other reasons is not. Those who are receiving unemployment benefits are less willing to migrate than those who are not receiving such benefits.     

Migration and foreign direct investment: education matters

The rapid growth in the foreign-born population in many high- and middle-income countries in recent decades has prompted much research on the socio-economic determinants and impacts of immigration. This paper investigates the relationship between the stock of foreign population by nationality living in the UK and the bilateral stock of foreign direct investment (FDI), both inward FDI into the UK and outward FDI from the UK. This study contributes to the literature on the above-mentioned association between migration and FDI, by using the UK annual data from 2001 to 2007 for 22 countries on the inward volume of FDI and for 27 countries on the outward volume of FDI. Our study finds a significant and positive relationship between migration and outward FDI. This result also holds, if we correct for endogeneity by using an instrumental variable approach. If we then include the education level of migrants living in the UK, our results indicate that the more educated migrants from a certain country are, the stronger positive effect they have on FDI in both directions (inward and outward).     

Immigration and Native Employment. Evidence from Italian Provinces in the Aftermath of the Great Recession

This study exploits the variability in the incidence of recent immigration inflows and the change in native employment in the Italian provinces to shed light on the impact of immigration on employment in rigid local labour markets. The study focuses on the period that followed the financial and sovereign debt crises, which strongly hit the labour markets of the Italian provinces. The results reveal a negligible overall impact of immigration on provincial employment which, however, hides differentiated impacts for different groups of natives. Employment responses to immigration shocks vary greatly depending on the skills and gender of the natives.     

Convergence theory,labour movements,and corporatism: The case of housing 1

This study undertakes a statistical analysis of housing policy and housing market developments in 18 advanced industrial countries comparing the early 1970s with the mid‐1980s. The article applies three modes of theoretical explanation, namely convergence theory, labour movement theory, and an institutional model based on theories of corporatism, focusing upon the first mode. The results show that contrary to convergence theory and its associated thesis of a particular “logic of industrialism”, institutional and ideological factors loom large. Analysing the structure of the market, ideological factors are found to be of greatest importance. At the same time, housing market processes and the character of housing policy are primarily determined by institutional factors, that is, the way in which market actors have been organized into or out of the housing policy system.     

Firm heterogeneity and the localization of economic activities

This paper examines how market‐access strategies, via exports and FDI, respond to changes in the level of integration. Empirical evidence shows that both firm exports and multinational activity are affected by trade liberalization episodes. We account for the strong positive correlation between exports and FDI by developing a general‐equilibrium model featuring firm heterogeneity, trade and FDI with final and intermediate products. Different geographical spaces are considered to quantify the effect of a preferential trade agreement (PTA) on supply‐mode decisions, for both partner and excluded countries. The model sheds new light on the mechanisms through which geography reshapes the concentration of economic activities both inside and outside the PTA area.     

Human capital and market size

This paper studies how the size of the labour market affects workers' decisions to invest in human capital. We consider a model of mismatch where firms rank workers according to their level of skills. The matching process operating in the market has the property that the job finding probability of workers depends on market size, market tightness and their ranking. The model is consistent with several facts highlighted in empirical studies: in bigger markets the distribution of human capital is more unequal and the returns to skill are higher.     

Housing Experience and Settlement Satisfaction: Recent Chinese,Indian and South African Skilled Immigrants to New Zealand

Relatively little work has been done on the housing experience of recent migrants from cultural backgrounds different to that of their host society. This absence is particularly marked for relatively high socio-economic status skilled migrants, many of whom have to negotiate housing markets significantly different from those in their countries of origin. Data obtained from a panel study of recent immigrants from three separate sources—China, India and South Africa—to New Zealand's main cities (primarily Auckland) are used to explore the nature of their housing experiences. Over a four-year period these migrants moved towards the New Zealand norm of owner occupied, detached dwellings, although more rapidly in some cases than others; the pace of movement reflected not only cultural differences among the three groups, relative to the New Zealand norms, but also experiences in the labour market. These differences are reflected in levels of satisfaction with the decision to move to New Zealand.     

Social networks and regional recruitment of foreign labour: Firm recruitment methods and spatial sorting in Denmark*

This paper tests the hypothesis that social networks are crucial for regional recruitment and inflows of foreign labour. New survey data on 971 firms located in Region Southern Denmark show that the predominant recruitment method of foreign labour was through networks. Danish municipal data from 1997–2006 furthermore reveal spatial sorting since initial shares of employees with a foreign background out of total regional employment predict foreign labour inflow rates to regional employment. Thus, social networks appear crucial for the recruitment and inflows of foreign labour, suggesting that employee referrals and information about vacancies in local job markets are also important for foreign labour. Resumen Este artículo pone a prueba la hipótesis de que las redes sociales son cruciales para la contratación regional y los flujos de mano de obra extranjera. Nuevos datos de una encuesta sobre 971 empresas ubicadas en la Región de Dinamarca Meridional muestran que el método de contratación predominante de mano de obra extranjera fue a través de redes. Datos municipales daneses de 1997‐2006 revelan además una clasificación espacial, ya que las cuotas iniciales de empleados de origen extranjero respecto del empleo regional total predicen tasas de afluencia de mano de obra extranjera para el empleo regional. Por tanto, las redes sociales parecen ser cruciales para el reclutamiento y la afluencia de mano de obra extranjera, lo cual sugiere que las referencias de los empleados y la información sobre ofertas de empleo en los mercados laborales locales son también importantes para la mano de obra extranjera.      

A qualifications trap in the German construction industry: changing the production model and the consequences for the training system in the German construction industry

German construction companies traditionally rely on qualified workers. This has influenced both their production model (work organization on site) and their policy towards training and education. Due to the massive inflow of workers from countries with low labour costs, firms may fundamentally change this model to a new one which is distinguished by the combination of less qualified workers with a larger number of managers for instruction, supervision and control. This change is initially likely to have a considerable knock-on effect on the training system. However, what is even worse is that the new model is not likely to work in the long run. To date the construction industry has acquired its site managers and supervisors directly from the pool of qualified workers. By reducing training it produces a shortage of the very resource inevitably needed to be able to reduce training. The industry will fall into a qualifications trap. What is more significant is that this trap is shown as a first step towards lowering corporate image, quality of human resources, productivity and, in the end, competitiveness.     

Learning mobility grants and skill (mis)matching in the labour market: The case of the ‘Master and Back’ Programme

This paper looks at the geographical mobility of graduate students and their skill matching in the labour market. The paper assesses the impact of a learning mobility grant scheme funded by the European Social Fund in Sardinia (ex‐Objective 1 region in the Italian Mezzogiorno). The scheme aims to foster regional human capital and increase the employability of local graduates by covering the cost of post‐graduate studies in other regions or countries. The econometric analysis is based on a unique dataset that combines administrative data on beneficiaries with information from a dedicated survey. The results suggest that learning mobility grants can reinforce skill matching only if the problem of self‐selection of the beneficiaries is properly addressed.