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Human Capital and Externalities in Cities

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Author Info
Ciccone, Antonio
Peri, Giovanni

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Abstract

We combine growth theory with US Census data on individual schooling and wages to estimate the aggregate return to human capital and human capital externalities in cities. Our estimates imply that a one year increase in average schooling in cities increases their aggregate labour productivity by 8 to 11%. We find no evidence for aggregate human capital externalities in cities however, although we use three different approaches. Our main theoretical contribution is to show how human capital externalities can be identified (non-parametrically) even if workers with different levels of human capital are imperfect substitutes in production.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2599.

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Date of creation: Nov 2000
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Handle: RePEc:cpr:ceprdp:2599

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Related research
Keywords: Aggregate Return To Human Capital; Cities; Decreasing Returns To Human Capital; Human Capital Externalities; Imperfect Substitution; Perfect Substitution; Scale Externalities;

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Find related papers by JEL classification:
J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
O0 - Economic Development, Technological Change, and Growth - - General
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
R0 - Urban, Rural, and Regional Economics - - General

References listed on IDEAS
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  3. Sveikauskas, Leo A, 1975. "The Productivity of Cities," The Quarterly Journal of Economics, MIT Press, vol. 89(3), pages 393-413, August. [Downloadable!] (restricted)
  4. Orley Ashenfelter & Cecilia Rouse, 1998. "Income, Schooling, And Ability: Evidence From A New Sample Of Identical Twins," The Quarterly Journal of Economics, MIT Press, vol. 113(1), pages 253-284, February. [Downloadable!] (restricted)
    Other versions:
  5. Rebelo, Sergio, 1991. "Long-Run Policy Analysis and Long-Run Growth," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 500-521, June. [Downloadable!] (restricted)
    Other versions:
  6. Acemoglu, Daron, 1996. "A Microfoundation for Social Increasing Returns in Human Capital Accumulation," The Quarterly Journal of Economics, MIT Press, vol. 111(3), pages 779-804, August. [Downloadable!] (restricted)
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  9. Moretti, Enrico, 2004. "Human capital externalities in cities," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 51, pages 2243-2291 Elsevier. [Downloadable!] (restricted)
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  10. Simon, Curtis J., 1998. "Human Capital and Metropolitan Employment Growth," Journal of Urban Economics, Elsevier, vol. 43(2), pages 223-243, March. [Downloadable!] (restricted)
  11. Almond, Douglas & Ciccone, Antonio & Peri, Giovanni, 1999. "Capital, Wages and Growth: Theory and Evidence," CEPR Discussion Papers 2199, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  12. Robert E. Lucas, Jr., 2001. "Externalities and Cities," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(2), pages 245-274, April. [Downloadable!] (restricted)
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  15. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier. [Downloadable!] (restricted)
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  18. Daron Acemoglu & Joshua Angrist, 1999. "How Large are the Social Returns to Education? Evidence from Compulsory Schooling Laws," Working papers 99-30, Massachusetts Institute of Technology (MIT), Department of Economics.
    Other versions:
  19. Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
    • Glaeser, Edward L & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1992. "Growth in Cities," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1126-52, December. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Guido De Blasio & Sabrina Di Addario, 2002. "Labor market pooling: evidence from Italian industrial districts," Temi di discussione (Economic working papers) 453, Bank of Italy, Economic Research Department. [Downloadable!]
  2. Ron Vreeker, 2004. "Urban Multifunctional Land Use and Externalities," ERSA conference papers ersa04p346, European Regional Science Association. [Downloadable!]
  3. Nicola D. Coniglio, 2002. "Regional Intergration and Migration: An Economic Geography Model with Hetergenous Labour Force," Working Papers 2003_1, Department of Economics, University of Glasgow. [Downloadable!]
  4. Ludger WöÂßmann, 2000. "Specifying Human Capital: A Review, Some Extensions, and Development Effects," Kiel Working Papers 1007, Kiel Institute for the World Economy. [Downloadable!]
  5. Sabrina Di Addario & Eleonora Patacchini, 2006. "Is there an urban wage premium in Italy?," Temi di discussione (Economic working papers) 570, Bank of Italy, Economic Research Department. [Downloadable!]
  6. Steve Gibbons, 2001. "Paying for good neighbours? Neighbourhood deprivation and the communiy benefits of education," CEE Discussion Papers 0017, Centre for the Economics of Education, LSE. [Downloadable!]
  7. Matteo Bellinzas, 2004. "Dinamiche demografiche, agglomerazione e determinanti economiche. Il caso italiano," Working Paper CRENoS 200407, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia. [Downloadable!]
  8. Huw Lloyd-Ellis, 2003. "On the Impact of Inequality on Productivity Growth in the Short and Long Term: A Synthesis," Canadian Public Policy, University of Toronto Press, vol. 29(s1), pages 65-86, January. [Downloadable!] (restricted)
  9. Giuseppe De Arcangelis & Giordano Mion, . "Spatial Externalities and Empirical Analysis: The case of Italy," series 0006, Dipartimento di Scienze Economiche - Università di Bari. [Downloadable!]
    Other versions:
  10. Sabrina Di Addario & Eleonora Patacchini, 2005. "Wages and the City. The Italian case," Economics Series Working Papers 243, University of Oxford, Department of Economics. [Downloadable!]
  11. Giovanni Peri, 2001. "Young People, Skills and Cities," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  12. Sabrina Di Addario & Guido De Blasio, 2002. "Labor Market Pooling," IMF Working Papers 02/121, International Monetary Fund. [Downloadable!]
  13. Henry Overman & Stephen Redding & Anthony J. Venables, 2001. "The Economic Geography of Trade, Production, and Income: A Survey of Empirics," CEP Discussion Papers dp0508, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
  14. Daron Acemoglu & Joshua Angrist, 1999. "How Large are the Social Returns to Education? Evidence from Compulsory Schooling Laws," NBER Working Papers 7444, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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