The Workforce of Pioneer Plants

CID Working Paper No. 310

Ricardo Hausmann and Frank Neffke
January 2016


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 reunification has often focused on the effects of east-west migration, we show that the opposite migration facilitated the industrial diversification of eastern Germany by giving access to experienced workers from western Germany.

JEL codes: O33, R11, R12, O15, M13, M50, J23, J24

Keywords: diversification, technological diffusion, local labor markets, industry-specific human capital, mobility, clusters, Germany

Affiliated Research Program: Growth Lab