How regions diversify into new jobs: from related industries or related occupations?

Abstract

This paper adds a multidimensional perspective to the study of related diversification. We examine how regions diversify into new jobs – defined as unique industry-occupation combinations – asking whether they do so from related industries or related occupations. We use linked employer-employee data for all labour market regions in Norway, covering the time period 2009–2014. Diversification into new jobs is more likely in the presence of related occupations and industries in a region. Furthermore, occupational and industrial relatedness have complementary effects on diversification. Occupational relatedness and its interaction with industrial relatedness are particularly important for diversification into more complex activities.