Differences in Labor versus Value Chain Industry Clusters: An Empirical Investigation

ABSTRACT Regional analysts often identify industry clusters according to a single dimension of industrial interdependence, typically by trading patterns as revealed in national or regionalized input–output data. This is despite the fact that the theory underpinning regional industry cluster applications draws heavily on Marshall's theory of external economies, including the important role of labor pooling economies and knowledge spillovers in addition to spatially co‐located suppliers. This article investigates whether industry clusters identified based on trading relationships (value chain clusters) are meaningfully different in industrial composition and geography than those derived from an analysis of occupational employment requirements (labor‐based clusters). The results suggest that value chain linkages are a weak proxy for shared labor requirements, and vice versa.