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Agglomeration and job matching among college graduates

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  • Jaison R. Abel
  • Richard Deitz

Abstract

We study one potential source of urban agglomeration economies: better job matching. Focusing on college graduates, we construct two direct measures of job matching based on how well an individual’s job corresponds to his or her college education. Consistent with matching-based theories of urban agglomeration, we find evidence that larger and thicker local labor markets help college graduates find better jobs by increasing both the likelihood and quality of a match. We then assess the extent to which better job matching of college-educated workers increases individual-level wages and thereby contributes to the urban wage premium. While we find that college graduates with better job matches do indeed earn higher wages on average, the contribution of such job matching to aggregate urban productivity appears to be relatively modest.

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Bibliographic Info

Paper provided by Federal Reserve Bank of New York in its series Staff Reports with number 587.

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Date of creation: 2012
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Handle: RePEc:fip:fednsr:587

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Keywords: Wages ; Productivity ; Employment ; College graduates ; Labor market ; Urban economics;

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References

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  1. Diego Puga, 2009. "The magnitude and causes of agglomeration economies," Working Papers 2009-09, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
  2. Christopher H. Wheeler, 2007. "Local market scale and the pattern of job changes among young men," Working Papers 2005-033, Federal Reserve Bank of St. Louis.
  3. Jaison R. Abel & Ishita Dey & Todd M. Gabe, 2012. "Productivity And The Density Of Human Capital," Journal of Regional Science, Wiley Blackwell, vol. 52(4), pages 562-586, October.
  4. Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon & Sébastien Roux, 2010. "Estimating Agglomeration Economies with History, Geology, and Worker Effects," NBER Chapters, in: Agglomeration Economics, pages 15-66 National Bureau of Economic Research, Inc.
  5. Dora L. Costa & Matthew E. Kahn, 2000. "Power Couples: Changes In The Locational Choice Of The College Educated, 1940-1990," The Quarterly Journal of Economics, MIT Press, vol. 115(4), pages 1287-1315, November.
  6. Baumgardner, James R, 1988. "Physicians' Services and the Division of Labor across Local Markets," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 948-82, October.
  7. Robst, John, 2007. "Education and job match: The relatedness of college major and work," Economics of Education Review, Elsevier, vol. 26(4), pages 397-407, August.
  8. Hoyt Bleakley & Jeffrey Lin, 2007. "Thick-market effects and churning in the labor market: evidence from U.S. cities," Working Papers 07-23, Federal Reserve Bank of Philadelphia.
  9. Di Addario, Sabrina, 2011. "Job search in thick markets," Journal of Urban Economics, Elsevier, vol. 69(3), pages 303-318, May.
  10. Marshall, Alfred, 1890. "The Principles of Economics," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number marshall1890.
  11. Segal, David, 1976. "Are There Returns to Scale in City Size?," The Review of Economics and Statistics, MIT Press, vol. 58(3), pages 339-50, August.
  12. Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2004. "Spatial Wage Disparities: Sorting Matters!," CEPR Discussion Papers 4240, C.E.P.R. Discussion Papers.
  13. Sveikauskas, Leo A, 1975. "The Productivity of Cities," The Quarterly Journal of Economics, MIT Press, vol. 89(3), pages 393-413, August.
  14. Jeffrey Yankow, 2009. "Some Empirical Evidence of the Efficacy of Job Matching in Urban Labor Markets," International Advances in Economic Research, Springer, vol. 15(2), pages 233-244, May.
  15. Sato, Yasuhiro, 2001. "Labor Heterogeneity in an Urban Labor Market," Journal of Urban Economics, Elsevier, vol. 50(2), pages 313-337, September.
  16. Helsley, Robert W. & Strange, William C., 1990. "Matching and agglomeration economies in a system of cities," Regional Science and Urban Economics, Elsevier, vol. 20(2), pages 189-212, September.
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Cited by:
  1. Winters, John V., 2013. "STEM Graduates, Human Capital Externalities, and Wages in the U.S," IZA Discussion Papers 7830, Institute for the Study of Labor (IZA).

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