Technology shifts and reallocation of labour: On the role of leading industries

In our paper we address a gap in the literature, identified by Silverberg (2007), who claims that we miss an objective criteria for identifying leading sectors associated with technology-induced structural change and measuring their effects on functioning of the economy. In particular, we analyse the role of leading industries in labour reallocation across regions as a mechanism of smoothing regional labour market disparities in times of industrial restructuring. In addressing the issue we try to bridge insights from macro-evolutionary economic geography with labour economics’ perspective on labour mobility as a response mechanism to economic shocks. Our findings suggest that (1) an industrial structure of a region, and, particularly, a presence of leading industries, which are driving structural change induced by introduction of ICT, played an important role in shaping patterns of inter-regional labour mobility in Sweden since 1985; (2) it is service branches that seem to be a major driver behind shaping labour mobility patterns while manufacturing has only a minor role mostly by helping to retain workers in a region; (3) an employment structure in a region plays a greater role than its size in terms of attracting/retaining workers in the region.