Identifying Human-Capital Externalities: Theory with Applications
AbstractThe identification of aggregate human-capital externalities is still not fully understood. The existing (Mincerian) approach confounds positive externalities with wage changes due to a downward sloping demand curve for human capital. As a result, the Mincerian approach yields positive externalities even when wages equal marginal social products. We propose an approach that identifies human-capital externalities, whether or not aggregate demand for human capital slopes downward. Another advantage of our approach is that it does not require estimates of the individual return to human capital. Applications to U.S. cities and states between 1970 and 1990 yield no evidence of significant average-schooling externalities. Copyright 2006, Wiley-Blackwell.
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Bibliographic InfoArticle provided by Oxford University Press in its journal The Review of Economic Studies.
Volume (Year): 73 (2006)
Issue (Month): 2 ()
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Other versions of this item:
- Ciccone Antonio & Peri Giovanni, 2007. "Identifying Human Capital Externalities. Theory with Applications," Working Papers 201098, Fundacion BBVA / BBVA Foundation.
- Antonio Ciccone & Giovanni Peri, 2003. "Identifying Human Capital Externalities: Theory with Applications," Working Papers 6, Barcelona Graduate School of Economics.
- O0 - Economic Development, Technological Change, and Growth - - General
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
- R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
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