Diversity, employment growth and spatial spillovers amongst Irish regions

Regional employment growth has become an area of increasing interest to academics and policymakers alike over recent years. To date little empirical research has been undertaken in regards to the relationship between economic diversity and regional employment growth with even less research considering the potential for regional spillovers. This paper analyses this gap in the existing literature by considering the roles of three categories of diversity (total, related and unrelated) on Irish employment growth over the period 2006–2012. Utilising a spatial econometric model we note not only the positive effect of spatial spillovers in regards to employment growth, but also the differing impacts of all three measures. Our results indicate that for this particular period a diverse industry structure has a significant positive impact on employment growth. We find that total diversity and its two sub-components related and unrelated diversity positively effects employment growth. Unrelated diversity is found to have the largest positive effect.