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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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  1. Jonathan Morduch & Terry Sicular, 1998. "Rethinking Inequality Decomposition, with Evidence from Rural China," Harvard Institute of Economic Research Working Papers 1831, Harvard - Institute of Economic Research.
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  6. Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2004. "Spatial Wage Disparities: Sorting Matters!," CEPR Discussion Papers 4240, C.E.P.R. Discussion Papers.
  7. Anthony Briant & Pierre-Philippe Combes & Miren Lafourcade, 2008. "Dots to boxes: Do the size and shape of spatial units jeopardize economic geography estimations?," PSE Working Papers halshs-00586029, HAL.
  8. Briant, A. & Combes, P.-P. & Lafourcade, M., 2010. "Dots to boxes: Do the size and shape of spatial units jeopardize economic geography estimations?," Journal of Urban Economics, Elsevier, vol. 67(3), pages 287-302, May.
  9. Beaudry, Catherine & Schiffauerova, Andrea, 2009. "Who's right, Marshall or Jacobs? The localization versus urbanization debate," Research Policy, Elsevier, vol. 38(2), pages 318-337, March.
  10. Joeri Gorter & Suzanne Kok, 2009. "Agglomeration economies in the Netherlands," CPB Discussion Paper 124, CPB Netherlands Bureau for Economic Policy Analysis.
  11. Dinand Webbink, 2004. "Returns to university education; evidence from an institutional reform," CPB Discussion Paper 34, CPB Netherlands Bureau for Economic Policy Analysis.
  12. repec:dgr:uvatin:20070079 is not listed on IDEAS
  13. Henri de Groot & Richard Nahuis & Paul Tang, 2004. "Is the American model Miss World? Choosing between the Anglo-Saxon model and a European-style alternative," CPB Discussion Paper 40, CPB Netherlands Bureau for Economic Policy Analysis.
  14. Fishlow, Albert, 1972. "Brazilian Size Distribution of Income," American Economic Review, American Economic Association, vol. 62(2), pages 391-402, May.
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