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Local Human Capital and Its Impact on Local Employment Chances in Britain

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  • Ioannis Kaplanis
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    Abstract

    This paper examines how high human capital in a locality is associated with the employment outcomes of individuals. A probit model is used to examine how the employment probability of otherwise similar working age males is associated with changes in the share of degree holders in the local area. Different econometric specifications are employed in order to shed light on the positive effect found and its possible causes. The paper discusses three main accounts, referring to the consumption demand, productivity spillovers and production complementarities. For Britain, it is found that the share of high skill residents in a locality has a strong positive impact on the local employment chances of men with no qualifications. The effect on the local employment chances of the other educational groups is either insignificant or significant negative. These results are consistent with the consumer demand hypothesis that the presence of high educated, high income individuals in a locality boosts the demand for local low skill services. On the other hand, when the share of skilled workers is used, the results hint on possible simultaneous effect of production complementarities and productivity spillovers. However, the analysis points to the existing limitations of successfully isolating the consumption demand and the production function mechanisms and calls for further research.

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    File URL: http://www.spatialeconomics.ac.uk/textonly/serc/publications/download/sercdp0040.pdf
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    Bibliographic Info

    Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0040.

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    Date of creation: Jan 2010
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    Handle: RePEc:cep:sercdp:0040

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    Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

    Related research

    Keywords: local labour markets; employment; consumer demand; human capital externalities;

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    Cited by:
    1. John V. Winters, 2013. "Human capital externalities and employment differences across metropolitan areas of the USA," Journal of Economic Geography, Oxford University Press, vol. 13(5), pages 799-822, September.
    2. Kaplanis, Ioannis, 2011. "Wage effects from changes in local human capital in Britain," Working Papers 2072/179614, Universitat Rovira i Virgili, Department of Economics.

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