Location of the workforce and firm performance

The literature on urban economics has so far focused on the location problem mainly from the viewpoint of workers while totally neglecting the impact on firm performance of the distance at which her workforce resides. It is indeed plausible that, everything else equal, a higher distance from the firm of her employees could lower firm productivity because workers waste time and energy in long commutes. At the same time, when thinking about key positions within a firm, it is plausible that a perspective employer would be willing to search reasonably far away to find the right person for the job. A second group of related questions pertains to what happens to a location when a big firm establish herself in a neighbor. The literature has so far identified productivity effects spilling over to other local firms. However, the nature of these productivity spillovers is understudied, and we would like to explore the role of the labor market in favoring productivity gains.

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