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Regional wage differences in the Netherlands: Micro-evidence on agglomeration externalities

  • Stefan Groot

    ()

  • Henri de Groot

    ()

  • Martijn Smit

Based on micro-data on individual workers for the period 2000–2005, we show that regional wage differentials in the Netherlands are small but present. A large part of these differentials can be attributed to individual characteristics of workers. Remaining effects are partially explained by variations in employment density, with an elasticity of about 3.8 percent and by Marshall-Arrow-Romer externalities, where doubling the share of a (2-digit NACE) industry results in a 2.4 percent higher productivity. We find evidence for a negative effect of competition (associated with Porter externalities) and diversity (associated with Jacobs externalities).

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Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Discussion Paper with number 184.

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Date of creation: Jul 2011
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Handle: RePEc:cpb:discus:184
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