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Human Capital Externalities and Growth of High- and Low-Skilled Jobs


  • Südekum Jens

    () (University of Duisburg-Essen, Mercator School of Management, Lotharstrasse 65, 47057 Duisburg, Germany)


Human capital is unequally distributed across cities or regions within a country. The way how the spatial distribution of human capital evolves over time sheds light on the strength of concentration forces for high-skilled workers, such as localised increasing returns to human capital. In this paper I analyse the impact of human capital on local employment growth for Western German regions (1977-2006). Two main empirical facts are established: “Skilled cities” in Western Germany grow faster. At the same time there is convergence of human capital shares across cities, i.e., high-skilled workers do not increasingly concentrate in space. Whereas the first fact (the “smart city hypothesis”) similarly holds in Germany and in the US, there is a striking difference when it comes to the second fact. Some researchers have found an opposite trend of human capital divergence across US metropolitan areas. My findings suggest that human capital exhibits a different spatial trend in different countries. I present a theoretical model which shows that the spatial convergence trend does not imply that concentration forces for high-skilled workers are absent in Western Germany, but only that they are relatively weak compared to countervailing dispersion forces. I further discuss some reasons that may explain the differences between Western Germany and the US. I emphasise the role of the tax system and the impact of pro-dispersive regional policy in Europe.

Suggested Citation

  • Südekum Jens, 2010. "Human Capital Externalities and Growth of High- and Low-Skilled Jobs," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 230(1), pages 92-114, February.
  • Handle: RePEc:jns:jbstat:v:230:y:2010:i:1:p:92-114

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    References listed on IDEAS

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    Cited by:

    1. Batabyal, Amitrajeet & Nijkamp, Peter, 2018. "Creative Capital, Information and Communication Technologies, and Economic Growth in Smart Cities," MPRA Paper 83952, University Library of Munich, Germany.
    2. Combes, Pierre-Philippe & Gobillon, Laurent, 2015. "The Empirics of Agglomeration Economies," Handbook of Regional and Urban Economics, Elsevier.
    3. Ishwarya Balasubramanian, 2016. "Local skill concentrations and district employment growth: a simultaneous equation approach for India," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(2), pages 491-511, March.
    4. Verardi Vincenzo & Wagner Joachim, 2011. "Robust Estimation of Linear Fixed Effects Panel Data Models with an Application to the Exporter Productivity Premium," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 231(4), pages 546-557, August.
    5. Kim, Young-Joon & Song, Joonhyuk, 2014. "Romer Meets Heterogeneous Workers In An Endogenous Growth Model," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 55(2), pages 121-146, December.
    6. Ana María Díaz, 2011. "The Employment Advantages of Skilled Urban Areas," VNIVERSITAS ECONÓMICA 010087, UNIVERSIDAD JAVERIANA - BOGOTÁ.
    7. Jan Wedemeier, 2011. "Creative professionals and high-skilled agents': Polarization of employment growth?," ERSA conference papers ersa11p489, European Regional Science Association.
    8. Egger, Hartmut & Felbermayr, Gabriel, 2009. "Endogenous skill formation and the source country effects of emigration," Munich Reprints in Economics 20521, University of Munich, Department of Economics.
    9. Charlie Karlsson & Börje Johansson & Roger R. Stough, 2012. "Introduction – Human Capital and Agglomeration," Chapters,in: The Regional Economics of Knowledge and Talent, chapter 1 Edward Elgar Publishing.

    More about this item


    Human capital; local growth; externalities;

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General


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