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Human Capital and Externalities in Cities

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Author Info
Antonio Ciccone ()
Giovanni Peri

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Abstract

We combine growth theory with US Census data on individual schooling and wages to estimate the aggregate return to human capital and human capital externalities in cities. Our estimates imply that a one-year increase in average schooling in cities increases their aggregate labor productivity by 8 to 11 percent. We find no evidence for aggregate human capital externalities in cities however although we use three different approaches. Our main theoretical contribution is to show how human capital externalities can be identified (non-parametically) even if workers with different levels of human capital are imperfect substitutes in production.

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Publisher Info
Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 494.

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Date of creation: Jan 1999
Date of revision: Oct 2000
Handle: RePEc:upf:upfgen:494

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Related research
Keywords: Human capital; externalities; imperfect substitution;

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Find related papers by JEL classification:
O0 - Economic Development, Technological Change, and Growth - - General
O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
R0 - Urban, Rural, and Regional Economics - - General
J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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References listed on IDEAS
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    Other versions:
  3. Sveikauskas, Leo A, 1975. "The Productivity of Cities," The Quarterly Journal of Economics, MIT Press, vol. 89(3), pages 393-413, August. [Downloadable!] (restricted)
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  6. Henderson, J. Vernon, 1986. "Efficiency of resource usage and city size," Journal of Urban Economics, Elsevier, vol. 19(1), pages 47-70, January. [Downloadable!] (restricted)
  7. Moretti, Enrico, 2004. "Human capital externalities in cities," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 51, pages 2243-2291 Elsevier. [Downloadable!] (restricted)
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  8. Robert E. Lucas, Jr., 2001. "Externalities and Cities," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(2), pages 245-274, April. [Downloadable!] (restricted)
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  11. Antonio Ciccone & Giovanni Peri & Douglas Almond, 1999. "Capital, Wages, and Growth: Theory and Evidence," Economics Working Papers 389, Department of Economics and Business, Universitat Pompeu Fabra, revised May 1999. [Downloadable!]
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  12. Islam, Nazrul, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 1127-70, November. [Downloadable!] (restricted)
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  15. Rebelo, Sergio, 1991. "Long-Run Policy Analysis and Long-Run Growth," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 500-521, June. [Downloadable!] (restricted)
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  18. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier. [Downloadable!] (restricted)
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    Other versions:
  20. Daron Acemoglu & Joshua Angrist, 1999. "How Large are the Social Returns to Education? Evidence from Compulsory Schooling Laws," Working papers 99-30, Massachusetts Institute of Technology (MIT), Department of Economics.
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  21. Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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    • Glaeser, Edward L & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1992. "Growth in Cities," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1126-52, December. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Guido De Blasio & Sabrina Di Addario, 2002. "Labor market pooling: evidence from Italian industrial districts," Temi di discussione (Economic working papers) 453, Bank of Italy, Economic Research Department. [Downloadable!]
  2. Ludger WöÂßmann, 2000. "Specifying Human Capital: A Review, Some Extensions, and Development Effects," Kiel Working Papers 1007, Kiel Institute for the World Economy. [Downloadable!]
  3. Sabrina Di Addario & Eleonora Patacchini, 2006. "Is there an urban wage premium in Italy?," Temi di discussione (Economic working papers) 570, Bank of Italy, Economic Research Department. [Downloadable!]
  4. Huw Lloyd-Ellis, 2003. "On the Impact of Inequality on Productivity Growth in the Short and Long Term: A Synthesis," Canadian Public Policy, University of Toronto Press, vol. 29(s1), pages 65-86, January. [Downloadable!] (restricted)
  5. Giuseppe De Arcangelis & Giordano Mion, . "Spatial Externalities and Empirical Analysis: The case of Italy," series 0006, Dipartimento di Scienze Economiche - Università di Bari. [Downloadable!]
    Other versions:
  6. Sabrina Di Addario & Guido De Blasio, 2002. "Labor Market Pooling," IMF Working Papers 02/121, International Monetary Fund. [Downloadable!]
  7. Ron Vreeker, 2004. "Urban Multifunctional Land Use and Externalities," ERSA conference papers ersa04p346, European Regional Science Association. [Downloadable!]
  8. Nicola D. Coniglio, 2002. "Regional Intergration and Migration: An Economic Geography Model with Hetergenous Labour Force," Working Papers 2003_1, Department of Economics, University of Glasgow. [Downloadable!]
  9. Steve Gibbons, 2001. "Paying for good neighbours? Neighbourhood deprivation and the communiy benefits of education," CEE Discussion Papers 0017, Centre for the Economics of Education, LSE. [Downloadable!]
  10. Matteo Bellinzas, 2004. "Dinamiche demografiche, agglomerazione e determinanti economiche. Il caso italiano," Working Paper CRENoS 200407, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia. [Downloadable!]
  11. Sabrina Di Addario & Eleonora Patacchini, 2005. "Wages and the City. The Italian case," Economics Series Working Papers 243, University of Oxford, Department of Economics. [Downloadable!]
  12. Giovanni Peri, 2001. "Young People, Skills and Cities," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  13. Henry Overman & Stephen Redding & Anthony J. Venables, 2001. "The Economic Geography of Trade, Production, and Income: A Survey of Empirics," CEP Discussion Papers dp0508, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
  14. Daron Acemoglu & Joshua Angrist, 1999. "How Large are the Social Returns to Education? Evidence from Compulsory Schooling Laws," NBER Working Papers 7444, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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