R&D and Machinery in Regions. lnvestment and Labor Market Dynamics

Abstract

This dissertation explores the link between firm investments in R&D and machinery and regional labor market dynamics. Drawing on inspiration from economic geography, economics and economic history, it conceptualizes investment as a deliberate engagement with knowledge and technological advancements. Using detailed longitudinal administrative and survey data from Statistics Sweden, this study provides novel insights into how investment shapes regional job creation, and how related skills are sourced, developed, and diffused.

Findings show that, beyond localized job creation, investments lead to substantial qualitative transformations in workforce composition and capabilities. They do so by shaping recruitment strategies and fostering human capital development, while the new knowledge generated through these investments is subsequently disseminated via labor mobility. At the same time, investments tend to reinforce regional inequalities: well-endowed regions enter self-reinforcing cycles of skill accumulation and growth, while less-developed regions face skill shortages and talent outflows.

Theoretically, this dissertation contributes to a regional perspective on investments in knowledge and technological advancements, showing that such investments are both shaped by and shape regional labor markets. It also connects firm behavior to individual performance and regional dynamics. From a policy perspective, the findings highlight that investment-driven technological change can reinforce regional inequalities, suggesting the need for tailored policies that strengthen absorptive capacity and promote inclusive regional development.