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The Employment Advantages of Skilled Urban Areas

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  • Ana María Díaz

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Abstract

This paper explores whether the agglomeration of human capital leadsto social employment advantages in urban labor markets of a developing country:Colombia. It provides a brief review of the literature and tests empirically its predictionsusing census data for 1993 and 2005. I estimate the social effects of human capitalagglomeration by comparing employment opportunities of individuals located inurban areas in which the level of education differs. Results show that employmentopportunities are higher on average in skilled urban areas. Three explanations havebeen offered: human capital externalities, production complementarities, and consumptionspillovers. To distinguish between them, I analyze the effect of an increaseon the college share on the employment rate for different education groups. I findthat a percentage point increase in the supply of college graduates only affects theemployment rates of primary and high-school dropouts. Such a result suggest thatspatial employment differences in Colombia are mostly explained by human capitalexternalities and production complementarities.

Suggested Citation

  • Ana María Díaz, 2011. "The Employment Advantages of Skilled Urban Areas," VNIVERSITAS ECONÓMICA 010087, UNIVERSIDAD JAVERIANA - BOGOTÁ.
  • Handle: RePEc:col:000416:010087
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    More about this item

    Keywords

    local labor markets; employment; human capital externalities; production complementarities; consumerdemand spillovers; signaling; congestion.;

    JEL classification:

    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • 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

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