Frictional Unemployment and the Role of Industrial Diversity

Sectoral shifts, diversification and regional unemployment: evidence from local labour systems in Italy

“…It is widely recognized indeed that common shocks may generate asymmetric effects across industries: in fact, regions that are highly specialized in low-sensitive industries are expected to exhibit low vulnerability to aggregate disturbances; and viceversa. Conversely, more diversified economies should be more able to absorb the adverse labour market effects of common shocks through inter-sectoral mobility, as the portfolio hypothesis suggests (Simon, 1988;Simon and Nardinelli, 1992;Elhorst, 2003;Ferragina and Pastore, 2008). Jacobs (1969) had already reached similar conclusions, by arguing that sectoral diversification may offer more job opportunities and, thus, reduce the unemployment rate of a region.…”

“…The case of Italy is also particularly interesting because of the presence of strongly specialized LLSs, known as Industrial Districts (IDs). While the Portfolio hypothesis (Simon, 1988;Simon and Nardinelli, 1992) and Jacobs' (1969) theory would suggest that, thanks to their high degree of diversification, urban areas should buffer better adverse shocks than specialized LLSs, the Industrial Districts theory (Marshall, 1890;Becattini, 1991) posits that highly specialized areas may perform better than others due to the presence of agglomeration economies.…”

Industrial diversity and metropolitan unemployment rate

“…Industrial structure surely affects unemployment rate, and this paper examines the relationship between the two, with the aim of testing the hypothesis that more industrially diversified metropolitan areas have lower unemployment rates. This paper follows the theoretical justification of Simon (1988), who argues that industrial diversity attains a lower unemployment rate by assuming that the frictional component of employment fluctuations is a random variable and independent across industries. Simon's empirical analysis of 91 large U.S. SMSAs strongly supports the hypothesis.…”

Medición de la diversidad comercial minorista en áreas urbanas a través del uso de los índices de Shannon-Weaver y de Ullman-Dacey

“…Es ampliamente aceptada la tesis de que a mayor diversidad de las unidades económicas en una ciudad, la economía de ésta puede soportar cambios cíclicos en la demanda y por ende el empleo global se mantiene en límites aceptables (Bahl, Firestine y Phares, 1971;Simon, 1988 (2003) han mostrado, para casos específicos, que la tasa de desempleo es menor entre más diversificada industrialmente sea la ciudad.Dos maneras de medir la diversidad industrial son el índice de diversidad de Shannon-Weaver (Attaran, y Zwick, 1987a; 1987b; Nissan y Carter, 2010) …”

“…Es ampliamente aceptada la tesis de que a mayor diversidad de las unidades económicas en una ciudad, la economía de ésta puede soportar cambios cíclicos en la demanda y por ende el empleo global se mantiene en límites aceptables (Bahl, Firestine y Phares, 1971;Simon, 1988;Trendle y Shorney, 2003;Izraeli y Murphy 2003;Mason y Howard, 2010). De hecho, Simon (1988) e Izraeli y Murphy (2003) han mostrado, para casos específicos, que la tasa de desempleo es menor entre más diversificada industrialmente sea la ciudad.…”