Human Capital Externalities in Western Germany
AbstractThe paper sheds light on the impact of spatial agglomeration of human capital on individual wages in Western Germany. Using panel data it shows that regional wage differentials are to a large extent attributable to localized human capital externalities arising from the regional share of highly qualified workers. Employing the regional number of public schools and of students as instrumental variables the paper shows that human capital externalities are underestimated in ordinary panel regressions for wages of highly qualified and non-highly qualified workers alike due to supply shifts of highly qualified workers. An analysis by sector reveals that human capital externalities are more pronounced in manufacturing than in the service sector. We find indication that highly qualified workers benefit from intra-industry knowledge spillovers, while non-highly qualified workers profit from pecuniary externalities between industries. Our findings are stable among a variety of indicators of regional human capital and robust to the inclusion of other sources of increasing returns, as well as wage curve, price level, and amenity effects.
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Bibliographic InfoPaper provided by Institute of Labour Law and Industrial Relations in the European Union (IAAEU) in its series IAAEG Discussion Papers until 2011 with number 200903.
Length: 34 pages
Date of creation: Apr 2009
Date of revision:
Publication status: Published in Spatial Economic Analysis, Taylor and Francis Journals, vol. 6(2), pages 139-165
Human Capital Externalities; Agglomeration; Urban Wage Premium;
Other versions of this item:
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-04-18 (All new papers)
- NEP-GEO-2009-04-18 (Economic Geography)
- NEP-HRM-2009-04-18 (Human Capital & Human Resource Management)
- NEP-LAB-2009-04-18 (Labour Economics)
- NEP-URE-2009-04-18 (Urban & Real Estate Economics)
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- Florian Immanuel Schumacher & Joilson Dias, 2011. "The Human Capital Function: Sectoralexternalities," Anais do XXXVIII Encontro Nacional de Economia [Proceedings of the 38th Brazilian Economics Meeting] 215, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
- B. Fingleton & P. Cheshire & H. Garretsen & D. Igliori & J. Le Gallo & P. McCann & J. McCombie & V. Monastiriotis & B. Moore & M. Roberts, 2011. "We Move into Distinguished Company," Spatial Economic Analysis, Taylor & Francis Journals, vol. 6(2), pages 133-138.
- Filiztekin, Alpay, 2011. "Social returns to education in a developing country," MPRA Paper 35124, University Library of Munich, Germany.
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