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Local Human Capital and Its Impact on Local Employment Chances in Britain

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  • Ioannis Kaplanis

Abstract

This paper examines how high human capital in a locality is associated with the employment outcomes of individuals. A probit model is used to examine how the employment probability of otherwise similar working age males is associated with changes in the share of degree holders in the local area. Different econometric specifications are employed in order to shed light on the positive effect found and its possible causes. The paper discusses three main accounts, referring to the consumption demand, productivity spillovers and production complementarities. For Britain, it is found that the share of high skill residents in a locality has a strong positive impact on the local employment chances of men with no qualifications. The effect on the local employment chances of the other educational groups is either insignificant or significant negative. These results are consistent with the consumer demand hypothesis that the presence of high educated, high income individuals in a locality boosts the demand for local low skill services. On the other hand, when the share of skilled workers is used, the results hint on possible simultaneous effect of production complementarities and productivity spillovers. However, the analysis points to the existing limitations of successfully isolating the consumption demand and the production function mechanisms and calls for further research.

Suggested Citation

  • Ioannis Kaplanis, 2010. "Local Human Capital and Its Impact on Local Employment Chances in Britain," SERC Discussion Papers 0040, Spatial Economics Research Centre, LSE.
  • Handle: RePEc:cep:sercdp:0040
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    References listed on IDEAS

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    1. Ian Richard Gordon & Ioannis Kaplanis, 2014. "Accounting for Big-City Growth in Low-Paid Occupations: Immigration and/or Service-Class Consumption," Economic Geography, Clark University, vol. 90(1), pages 67-90, January.
    2. Ian R. Gordon & Philip McCann, 2005. "Innovation, agglomeration, and regional development," Journal of Economic Geography, Oxford University Press, vol. 5(5), pages 523-543, October.
    3. Ioannis Kaplanis, 2006. "The Geography of Employment Polarisation in Britain," ERSA conference papers ersa06p597, European Regional Science Association.
    4. Ioannis Kaplanis, 2010. "Wage Effects from Changes in Local Human Capital in Britain," SERC Discussion Papers 0039, Spatial Economics Research Centre, LSE.
    5. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    6. Maarten Goos & Alan Manning, 2007. "Lousy and Lovely Jobs: The Rising Polarization of Work in Britain," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 118-133, February.
    7. Glaeser, Edward L & Mare, David C, 2001. "Cities and Skills," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 316-342, April.
    8. Daniel Heuermann & Benedikt Halfdanarson & Jens Suedekum, 2010. "Human Capital Externalities and the Urban Wage Premium: Two Literatures and their Interrelations," Urban Studies, Urban Studies Journal Limited, vol. 47(4), pages 749-767, April.
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    Citations

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    Cited by:

    1. Lee, Neil & Sissons, Paul & Hughes, Ceri & Green, Anne & Atfield, Gaby & Adam, Duncan & Rodríguez-Pose, Andrés, 2014. "Cities, growth and poverty: evidence review," LSE Research Online Documents on Economics 55799, London School of Economics and Political Science, LSE Library.
    2. Neil Lee & Andrés Rodríguez-Pose, 2013. "Innovation and spatial inequality in Europe and USA," Journal of Economic Geography, Oxford University Press, vol. 13(1), pages 1-22, January.
    3. Kaplanis, Ioannis, 2010. "Wage effects from changes in local human capital in Britain," LSE Research Online Documents on Economics 33615, London School of Economics and Political Science, LSE Library.
    4. Neil Lee & Andrés Rodríguez-Pose, 2016. "Is there trickle-down from tech? Poverty, employment and the high-technology multiplier in US cities," Papers in Evolutionary Economic Geography (PEEG) 1618, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Aug 2016.
    5. John V. Winters, 2013. "Human capital externalities and employment differences across metropolitan areas of the USA," Journal of Economic Geography, Oxford University Press, vol. 13(5), pages 799-822, September.
    6. ., 2014. "Urban economic performance," Chapters,in: Urban Economics and Urban Policy, chapter 2, pages 11-53 Edward Elgar Publishing.
    7. Neil Lee & Stephen Clarke, 2017. "Who gains from high-tech growth? High-technology multipliers, employment and wages in Britain," SPRU Working Paper Series 2017-14, SPRU - Science and Technology Policy Research, University of Sussex.
    8. Ana María Díaz, 2011. "The Employment Advantages of Skilled Urban Areas," VNIVERSITAS ECONÓMICA 010087, UNIVERSIDAD JAVERIANA - BOGOTÁ.
    9. Neil Lee & Paul Sissons, 2016. "Inclusive growth? The relationship between economic growth and poverty in British cities," Environment and Planning A, , vol. 48(11), pages 2317-2339, November.

    More about this item

    Keywords

    local labour markets; employment; consumer demand; human capital externalities;

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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