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A re-examination of the social returns to education: Evidence from U.S. cities

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  • Sand, Benjamin M.

Abstract

This paper re-examines the impact of city educational composition on wages, often interpreted as human capital externalities. Using U.S. Census data, I find large, positive spillovers from college education in the 1980s, as documented by Moretti (2004a). In contrast, in the 1990s, the supply of skilled workers has no impact on average wages and may even negatively impact the wages of low-skill workers. These findings invite reinterpretation of previous studies on social returns to education, as shifts in the impact of city education composition on wages are not consistent with standard models of technological human capital externalities.

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  • Sand, Benjamin M., 2013. "A re-examination of the social returns to education: Evidence from U.S. cities," Labour Economics, Elsevier, vol. 24(C), pages 97-106.
    • Handle: RePEc:eee:labeco:v:24:y:2013:i:c:p:97-106
    DOI: 10.1016/j.labeco.2013.07.001
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    2. Mariana Pereira-López & Isidro Soloaga, 2015. "External returns to higher education in Mexico 2000-2010," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(1), pages 1-34, May.
    3. John V. Winters, 2018. "Do higher levels of education and skills in an area benefit wider society?," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-10, December.
    4. Cui, Ying & Martins, Pedro S., 2021. "What drives social returns to education? A meta-analysis," World Development, Elsevier, vol. 148(C).
    5. Rodrigo Perez-Silva & Mark D. Partridge & William E. Foster, 2019. "Are foreign-born researchers more innovative? Self-selection and the production of knowledge among PhD recipients in the USA," Journal of Geographical Systems, Springer, vol. 21(4), pages 557-594, December.
    6. Chris Bidner & Guillaume Roger & Jessica Moses, 2016. "Investing in Skill and Searching for Coworkers: Endogenous Participation in a Matching Market," American Economic Journal: Microeconomics, American Economic Association, vol. 8(1), pages 166-202, February.
    7. Luis Eduardo Arango & Gabriela Bonilla, 2015. "Human capital agglomeration and social returns to education in Colombia," Borradores de Economia 12788, Banco de la Republica.
    8. Liu, Shimeng & Yang, Xi, 2021. "Human capital externalities or consumption spillovers? The effect of high-skill human capital across low-skill labor markets," Regional Science and Urban Economics, Elsevier, vol. 87(C).
    9. Thönnessen, Rasmus, 2014. "Human capital externalities vs. substitution effects as determinants of regional wages: Evidence from German micro data," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100345, Verein für Socialpolitik / German Economic Association.

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    More about this item

    Keywords

    Wages; Externalities; Spillovers; Education; Local labor markets;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General
    • I2 - Health, Education, and Welfare - - Education

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