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Regional Wage Differences in the Netherlands: Micro-Evidence on Agglomeration Externalities

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  • Stefan P.T. Groot

    (VU University Amsterdam)

  • Henri L.F. de Groot

    (VU University Amsterdam)

  • Martijn Smit

    (VU University Amsterdam)

Abstract

Based on micro-data on individual workers for the period 2000-2005, we show that wage differentials in the Netherlands are small but present. A large part of these differentials can be attributed to individual characteristics of workers. Remaining effects are partially explained by variations in employment density, with an elasticity of about 3.8 percent and by Marshall-Arrow-Romer externalities, where doubling the share of a (2-digit NACE) industry results in a 2.4 percent higher productivity. We find evidence for a negative effect of competition (associated with Porter externalities) and diversity (associated with Jacobs externalities). This discussion paper led to a publication in the Journal of Regional Science .

Suggested Citation

  • Stefan P.T. Groot & Henri L.F. de Groot & Martijn Smit, 2011. "Regional Wage Differences in the Netherlands: Micro-Evidence on Agglomeration Externalities," Tinbergen Institute Discussion Papers 11-050/3, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20110050
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    More about this item

    Keywords

    regional labour markets; wage differentials; agglomeration externalities;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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