Industrial and Geographical Mobility of Workers Exiting the Swedish and West German Shipbuilding Industry 1970-2000

The dismantling of the shipbuilding industry in Sweden and West Germany has made plenty of workers redundant who needed to move to jobs in other industries. Arguments in the Evolutionary Economic Geography (EEG) literature suggest that such a reallocation can be alleviated in regions hosting many related industries. In such industries, previously acquired skills of workers can be readily used, or used in new combinations. Thereby, skill shortages of redundant workers can be minimized.

Using long-term employer-employee matched datasets and regression analysis, this paper follows the post-shipbuilding biographies of all workers at some point affiliated with the Swedish or West German shipbuilding industries from 1970 to 2000. We investigate how the geographical and industry frictions of job switches and the regional industry structure affect workers’ propensity to leave shipbuilding, start new work, or become non-employed. We trace also to what extent a move to a new job in related sectors, in- or outside the region, was beneficial for shipyard leavers in terms of wage changes. We derive  inter-industry ‘skill-relatedness’ from job moves, and select a set of generic related industries that were in both countries strongly skill-related over time with shipbuilding.

Older and more skilled workers cling on to shipbuilding even during decline, this tendency is strengthend if the region is highly specialized in this industry. We found also that the presence of generically related industries in the shipyard regions served the workers with decent exit opportunities, and protected against unemployment. This opportunity for workers staying in the same region without being subject to skill-destruction can impact the transformative capability of regional economies.  Related industries of an old industry might also deteriorate, achieving such moves is then difficult. In contrast to West Germany, this happened in Sweden, moves to these industries showed a negative wage increase in the very end from 1990 to 2000. In particular, during the most intense crisis period in Sweden, regional industrial diversity decreased the risk of unemployment. Thereby, our study contributes to a better understanding of these interactions between spatial and industry friction of movement and the present industry structure which are altogehter substantial for illustrating changes in the underlying resource base of regions, as suggested by EEG, and thus structural change.