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Human Capital and Productivity in US Cities

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  • Giovanni Peri

Abstract

In an empirical analysis, considering 236 U.S. cities in the period 1980-1990, we document a strong positive correlation between local supply of education skills and their return. In SMSA’s where the average education of workers is high the education premium is also high. This is true both considering the levels of the variables in 1980, 1990 and considering their changes. Technical progress, as well as physical capital investments, may be driven by local pressures to enhance the productivity of factors which are locally abundant. Therefore we may interpret this regularity as a sign that in cities where educated workers are abundant, firms will invest in skill-complementary machines and techniques. Acemoglou (1998) claims that this idea could explain the time evolution of education premia in the 80’s. Here I bring some compelling evidence that it may provide an explanation for the behavior of education premia across cities.

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Paper provided by IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University in its series Working Papers with number 138.

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Handle: RePEc:igi:igierp:138

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  1. Adam B. Jaffe & Manuel Trajtenberg & Rebecca Henderson, 1992. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," NBER Working Papers 3993, National Bureau of Economic Research, Inc.
  2. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
  3. Daron Acemoglu, 1998. "Why Do New Technologies Complement Skills? Directed Technical Change And Wage Inequality," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 113(4), pages 1055-1089, November.
  4. Antonio Ciccone & Robert E. Hall, 1995. "Productivity and the density of economic activity," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 120, Department of Economics and Business, Universitat Pompeu Fabra.
  5. Henderson, Vernon & Kuncoro, Ari & Turner, Matt, 1995. "Industrial Development in Cities," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 103(5), pages 1067-90, October.
  6. Guy Dumais & Glenn Ellison & Edward Glaeser, 1997. "Geographic Concentration as a Dynamic Process," NBER Working Papers 6270, National Bureau of Economic Research, Inc.
  7. Bound, John & Johnson, George, 1992. "Changes in the Structure of Wages in the 1980's: An Evaluation of Alternative Explanations," American Economic Review, American Economic Association, American Economic Association, vol. 82(3), pages 371-92, June.
  8. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 101(3), pages 410-42, June.
  9. Edward L. Glaeser & Bruce Sacerdote, 1996. "Why is There More Crime in Cities?," Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research 1746, Harvard - Institute of Economic Research.
  10. Acemoglu, Daron, 1996. "A Microfoundation for Social Increasing Returns in Human Capital Accumulation," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 111(3), pages 779-804, August.
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Cited by:
  1. Esteban Sanroma & Raul Ramos, 2007. "Local Human Capital and Productivity: An Analysis for the Spanish Regions," Regional Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 41(3), pages 349-359.
  2. Ramos, Raul & Sanroma, Esteban, 1999. "Local human capital and external economies: evidence for Spain," ERSA conference papers ersa99pa309, European Regional Science Association.
  3. Esteban Sanroma Melendez & Raul Ramos Lobo, 2001. "Capital humano local y productividad en las provincias espanolas," Working Papers in Economics, Universitat de Barcelona. Espai de Recerca en Economia 71, Universitat de Barcelona. Espai de Recerca en Economia.

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