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Market Thickness and the Early Labor Market Career of University Graduates- An urban advantage?

Author

Listed:
  • Ahlin, Lina

    (CIRCLE, Lund University)

  • Andersson, Martin

    (CIRCLE, Lund University)

  • Thulin, Per

    (Royal Institute of Technology and Swedish Entrepreneurship Forum)

Abstract

We analyze the influence of market thickness for skills on initial wages and subsequent wage development of university graduates. Using Swedish micro-level panel data on a cohort of graduates, we show that two out of three graduates move to large cities upon graduation. Large cities yield higher rewards to human capital and a stronger early job market career. The premium on initial wages for urban graduates is in the interval of 6-12 percent, and we estimate a wage-growth premium of about 3 percent. Thicker markets for skills appear as a key reason for the concentration of university graduates to larger cities.

Suggested Citation

  • Ahlin, Lina & Andersson, Martin & Thulin, Per, 2013. "Market Thickness and the Early Labor Market Career of University Graduates- An urban advantage?," Papers in Innovation Studies 2013/2, Lund University, CIRCLE - Centre for Innovation Research.
    • Handle: RePEc:hhs:lucirc:2013_002
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    References listed on IDEAS

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    1. Alessandra Faggian & Philip McCann, 2006. "Human capital flows and regional knowledge assets: a simultaneous equation approach," Oxford Economic Papers, Oxford University Press, vol. 58(3), pages 475-500, July.
    2. J. V. Henderson & J. F. Thisse (ed.), 2004. "Handbook of Regional and Urban Economics," Handbook of Regional and Urban Economics, Elsevier, edition 1, volume 4, number 4.
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    Cited by:

    1. Knutsson, Polina, 2018. "Sorting on Unobserved Skills into New Firms," Working Papers 2018:38, Lund University, Department of Economics.
    2. Chung-Shing Chan, 2023. "From the perspective of local brand equity, how do citizens perceive green, creative and smart brand potential of future Hong Kong?," Place Branding and Public Diplomacy, Palgrave Macmillan, vol. 19(4), pages 500-513, December.
    3. Kent Eliasson & Olle Westerlund, 2023. "The urban wage premium and spatial sorting on observed and unobserved ability," Journal of Economic Geography, Oxford University Press, vol. 23(3), pages 601-627.
    4. Martin Andersson & Johan Klaesson & Johan P. Larsson, 2016. "How Local are Spatial Density Externalities? Neighbourhood Effects in Agglomeration Economies," Regional Studies, Taylor & Francis Journals, vol. 50(6), pages 1082-1095, June.
    5. Orsa Kekezi & Ron Boschma, 2021. "Returns to migration after job loss—The importance of job match," Environment and Planning A, , vol. 53(6), pages 1565-1587, September.
    6. Fredrik Carlsen & Jorn Rattso & Hildegunn E. Stokke, 2013. "Education, experience and dynamic urban wage premium," Working Paper Series 15213, Department of Economics, Norwegian University of Science and Technology.
    7. Andersson, Martin & Henrekson, Magnus, 2014. "Local Competitiveness Fostered through Local Institutions for Entrepreneurship," Working Paper Series 1020, Research Institute of Industrial Economics.
    8. Korpi, Martin & Halvarsson, Daniel, 2023. "City Size, Employer Concentration, and Wage Income Inequality," Ratio Working Papers 363, The Ratio Institute.
    9. Hooijen, Inge & Bijlsma, Ineke & Cörvers, Frank & Poulissen, Davey, 2020. "The geographical psychology of recent graduates in the Netherlands: Relating enviornmental factors and personality traits to location choice," Research Memorandum 003, Maastricht University, Graduate School of Business and Economics (GSBE).
    10. Magdalena Kozera-Kowalska & Jarosław Uglis, 2021. "Students’ Perception of Education as a Preparation to Enter the Labour Market: A Case Study from a Polish University," European Research Studies Journal, European Research Studies Journal, vol. 0(3B), pages 338-349.
    11. Arthur Grimes & Shaan Badenhorst & David C. Maré & Jacques Poot, 2020. "Hometown wh?nau or big city millennials? The economic geography of graduate destination choices in New Zealand," Working Papers 20_04, Motu Economic and Public Policy Research.
    12. Larsson, Johan P. & Wennberg, Karl & Wiklund, Johan & Wright, Mike, 2017. "Location choices of graduate entrepreneurs," Research Policy, Elsevier, vol. 46(8), pages 1490-1504.
    13. Niclas Lavesson, 2017. "When And How Does Commuting To Cities Influence Rural Employment Growth?," Journal of Regional Science, Wiley Blackwell, vol. 57(4), pages 631-654, September.
    14. Arthur Grimes & Shaan Badenhorst & David C. Maré & Jacques Poot & Isabelle Sin, 2023. "Quality of life, quality of business, and destinations of recent graduates: fields of study matter," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 70(1), pages 55-80, February.
    15. Eliasson, Kent & Westerlund, Olle, 2019. "Graduate migration, self-selection and urban wage premiums across the regional hierarchy," Umeå Economic Studies 962, Umeå University, Department of Economics.
    16. Kent Eliasson & Olle Westerlund, 2023. "The urban wage premium and spatial sorting on observed and unobserved ability," Journal of International Economic Law, Oxford University Press, vol. 23(3), pages 601-627.
    17. Ida Lovén & Cecilia Hammarlund & Martin Nordin, 2020. "Staying or leaving? The effects of university availability on educational choices and rural depopulation," Papers in Regional Science, Wiley Blackwell, vol. 99(5), pages 1339-1365, October.

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    More about this item

    Keywords

    human capital; university graduates; urban wage premium; market thickness; matching; agglomeration economies; migration; job switching;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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