published in: Labour Economics, 2008, 15 (1), 118-140
We use a search and matching model to investigate the economic relationship between
training and local economic conditions. We identify two aspects of this relationship going in
opposite directions: on the one hand, the complementarity between local knowledge
spillovers and training generates a positive correlation with local density; on the other hand,
the negative influence of higher wages in denser areas reduces training. Overall the
relationship can be either positive or negative, depending on the relative strength of the two
effects. Our empirical analysis, based on a sample of Italian firms, shows that training is
lower in provinces with higher labor market density, measured as the number of employees
per squared kilometer. This empirical result confirms previous evidence by Brunello and
Gambarotto (2004) based on UK data.
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