How do occupational relatedness and complexity condition employment dynamics in periods of growth and recession?

Related diversification has generated interest in policy (Smart Specialisation) and academic (regional branching) circles,linking path creation to regional capabilities and performance. We develop measures of occupational relatedness andcomplexity for local labour market areas in Sweden over the period 2002–12 to examine whether these constructs arehelpful in explaining spatial and temporal variations in employment growth. The results indicate that increases inoccupational relatedness are positively related to employment growth, while changes in occupational complexity haveno significant impact. Separating the results either side of the globalfinancial crisis shows that the influence ofrelatedness on employment is stronger pre-2008, while after the crisis building specialization in more complexoccupations was positively associated with employment growth