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Market Thickness and the Early Labour Market Career of University Graduates: An Urban Advantage?


  • Lina Ahlin
  • Martin Andersson
  • Per Thulin


We analyse the influence of market thickness for skills on initial wages and the early job market career of university graduates. Using Swedish micro-level panel data on a cohort of graduates, we show that two out of three graduates move to large cities upon graduation. Large cities increase employment probabilities and yield higher rewards to human capital, even after controlling for employment selection. The premium on initial wages for graduates in urban regions is in the interval of 5–6%, and we estimate a wage-growth premium of about 2–4%. Thicker markets for skills appear as a key reason for the concentration of graduates to larger cities.

Suggested Citation

  • Lina Ahlin & Martin Andersson & Per Thulin, 2014. "Market Thickness and the Early Labour Market Career of University Graduates: An Urban Advantage?," Spatial Economic Analysis, Taylor & Francis Journals, vol. 9(4), pages 396-419, October.
  • Handle: RePEc:taf:specan:v:9:y:2014:i:4:p:396-419
    DOI: 10.1080/17421772.2014.961534

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    Cited by:

    1. Martin Andersson & Johan Klaesson & Johan P. Larsson, 2016. "How Local are Spatial Density Externalities? Neighbourhood Effects in Agglomeration Economies," Regional Studies, Taylor & Francis Journals, vol. 50(6), pages 1082-1095, June.
    2. repec:eee:respol:v:46:y:2017:i:8:p:1490-1504 is not listed on IDEAS
    3. Andersson, Martin & Henrekson, Magnus, 2014. "Local Competitiveness fostered through Local Institutions for Entrepreneurship," Papers in Innovation Studies 2014/4, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy.
    4. repec:bla:jregsc:v:57:y:2017:i:4:p:631-654 is not listed on IDEAS
    5. Knutsson, Polina, 2018. "Sorting on Unobserved Skills into New Firms," Working Papers 2018:38, Lund University, Department of Economics.
    6. Fredrik Carlsen & Jorn Rattso & Hildegunn E. Stokke, 2013. "Education, experience and dynamic urban wage premium," Working Paper Series 15213, Department of Economics, Norwegian University of Science and Technology.
    7. Larsson, Johan P. & Wennberg, Karl & Wiklund, Johan & Wright, Mike, 2017. "Location choices of graduate entrepreneurs," Research Policy, Elsevier, vol. 46(8), pages 1490-1504.

    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)


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