Labour flexibility and regional development: The role of labour market intermediaries

As contemporary labour markets have become more complex, volatile and unpredictable, labour market intermediaries (LMIs) have played an increasingly prominent role in shaping labour flexibility and regional development. Existing theories of regional development, however, do not adequately account for this prominent role. Using Silicon Valley as a case study, this paper contributes to developing a theory of intermediaries and regional development by highlighting the role LMIs play in three important labour market functions-reducing transactions costs, building networks and managing risk. In doing this, intermediaries play a critical role in shaping the speed and character of labour market adjustment, thus contributing directly to regional development, with significant implications for regional development policy.