The future geography of industries and occupations

Abstract

In this report we evaluate the opportunities for regional diversification in Europe over the last decade. We use microdata from the European Labour Force Survey to empirically test the entry and exit of occupational specializations at the regional level.Our results show that NUTS 2 regions are more likely to diversify into new occupations that are related to their existing local labour markets. So, the new opportunities for diversification are pathdependent, that is, they depend on the previous (occupational) production structure of the regions. Relatedness is especially important for diversifying toward complex occupations, thus increasing the potential economic benefits of the regions. However, there are significant regional heterogeneities in this related diversification process. Relatedness is positively associated with occupational specialization, but it loses strength as GDP per capita increases among European regions. Finally, we point out some policy orientations that can guide the paths of occupational diversification for European regions.