Regional labour market mobility. A network analysis of inter-firm relatedness

Labour market rigidity is known to hamper the proper adjustment of an economy, thus making it less resilient to shocks. This paper investigates the characteristics and resilience of the regional labour flow network in Veneto, a region famous for its industrial districts and the expertise of its workforce. A unique database of inter-firm worker mobility is used and the made-in-Italy relatedness to other industries is quantified. Descriptive results suggest that permanent-contract workers are more mobile within-sector than fixed-term contractors. The latter are more mobile across sectors. A finer disaggregation of the made-in-Italy industries shows that textile, food and woodwork are highly related to leisure-retail, logistics-wholesale and agriculture. These results can orient policy-making in getting faster labour reallocation. Network analysis establishes a number of stylised facts about labour flow networks, in particular, a hierarchical organisation of flows and a preference for workers to move from low-connected to high-connected firms and vice-versa, i.e. disassortativity. Unlike previous research, this paper identifies clusters of a non-spatial nature, that is, based on the intensity of labour flows. Regression analysis shows that labour mobility, both in and out, is beneficial for firms. However, being located inside labour clusters negatively affects firm performance. Interestingly, when these clusters include MNEs, the firm benefits. These results combined suggest that variety of connections prevails over standardisation.