Does spatial employment density spur inter-firm job switching?

Inter-firm job switching of workers is a much cited but seldom measured source of the productivity advantages of spatial employment density. It has been advanced as a conduit for localized knowledge flows as well as labor market matching efficiency. Using a matched employer-employee dataset for Sweden, we estimate the influence spatial employment density has on the probability of inter-firm job switching of private sector workers. Our estimates suggest that a doubling of employment density per square kilometer increases the probability that a random worker switches employer by 0.2 % points. The same effect is substantially higher for more skilled workers. While the effect of a doubling of density is limited, the actual differences in density across the regions in our data amount to a factor over 40, rendering differences in density an important explanation for regional variations in rates of inter-firm job switching.