Inter-Industry Labor Mobility in Taiwan, China

26 Pages Posted: 20 Apr 2016

See all articles by Howard Pack

Howard Pack

University of Pennsylvania - Management Department; University of Pennsylvania - Business & Public Policy Department

Christina H. Paxson

Princeton University; National Bureau of Economic Research (NBER)

Date Written: August 1999

Abstract

The proximity of industries is strongly related to inter-industry labor mobility, and there is some evidence that workers who move to closely similar industries receive higher wages. Knowledge is transmitted more easily when industries operate, and workers work, in close physical proximity.

Do flexible labor markets lubricate growth? Using data from Taiwan, China, to analyze the effects of labor market flexibility, Pack and Paxson find that: - Workers are more likely to move to industries that tend to be similar to their industry of origin (including intrasectoral moves that would be considered intersectoral if there were more sectoral disaggregation). The degree of similarity between two industries is measured in several ways, all of them based on the input-output flows across industries. Workers are more likely to move from industry i to industry j if i supplies a large share of j's inputs, receives a large share of its inputs from j, or uses many of the same inputs. - Moves to more similar industries produce larger wage gains. This is especially true when the industries' similarity is based on their using many of the same inputs. This may be partly because the close proximity of industries, occupations, and individuals provides an environment in which ideas flow quickly from person to person. - Gains are more likely to accrue to industries as a result of labor mobility.

This paper - a product of Public Economics, Development Research Group - is part of a larger effort in the group to analyze the potential need for public support of industrial development. Howard Pack may be contacted at hpack@worldbank.org.

Suggested Citation

Pack, Howard and Paxson, Christina H., Inter-Industry Labor Mobility in Taiwan, China (August 1999). Available at SSRN: https://ssrn.com/abstract=623891

Howard Pack (Contact Author)

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States

University of Pennsylvania - Business & Public Policy Department ( email )

3641 Locust Walk
Philadelphia, PA 19104-6372
United States

Christina H. Paxson

Princeton University ( email )

316 Wallace Hall
Princeton, NJ 08544
United States
609-258-6474 (Phone)
609-258-5974 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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