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Agglomeration and job matching among college graduates

We examine job matching as a potential source of urban agglomeration economies. Focusing on college graduates, we construct two direct measures of job matching based on how well an individual’s job corresponds to his or her college education. Consistent with matching-based theories of urban agglomeration, we find evidence that larger and thicker local labor markets increase both the likelihood and quality of a job match for college graduates. We then assess the extent to which better job matching of college-educated workers increases individual-level wages and thereby contributes to the urban wage premium. We find that college graduates with better job matches do indeed earn higher wages on average, though the contribution of such job matching to aggregate urban productivity appears to be relatively modest.

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Paper provided by Federal Reserve Bank of New York in its series Staff Reports with number 587.

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Length: 37 pages
Date of creation: 2012
Date of revision: 01 Dec 2014
Handle: RePEc:fip:fednsr:587
Note: NOTICE: This is the author’s version of a work that was accepted for publication in the journal Regional Science and Urban Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms, may not be reflected in this document. Changes may have been made to this work since it was submitted for publication.
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  1. Marcus Berliant & Robert R. Reed III & Ping Wang, 2000. "Knowledge Exchange, Matching, and Agglomeration," Vanderbilt University Department of Economics Working Papers 0033, Vanderbilt University Department of Economics.
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  12. Monica Andini & Guido de Blasio & Gilles Duranton & William C. Strange, 2012. "Marshallian labor market pooling: evidence from Italy," Working Papers 2012/27, Institut d'Economia de Barcelona (IEB).
  13. Christopher H. Wheeler, 2007. "Local market scale and the pattern of job changes among young men," Working Papers 2005-033, Federal Reserve Bank of St. Louis.
  14. Wagner, Alfred, 1891. "Marshall's Principles of Economics," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 5, pages 319-338.
  15. Helsley, Robert W. & Strange, William C., 1990. "Matching and agglomeration economies in a system of cities," Regional Science and Urban Economics, Elsevier, vol. 20(2), pages 189-212, September.
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  25. Miller, Robert A, 1984. "Job Matching and Occupational Choice," Journal of Political Economy, University of Chicago Press, vol. 92(6), pages 1086-120, December.
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  27. Neal, Derek, 1999. "The Complexity of Job Mobility among Young Men," Journal of Labor Economics, University of Chicago Press, vol. 17(2), pages 237-61, April.
  28. Joseph G. Altonji & Erica Blom & Costas Meghir, 2012. "Heterogeneity in Human Capital Investments: High School Curriculum, College Major, and Careers," NBER Working Papers 17985, National Bureau of Economic Research, Inc.
  29. Bowlus, Audra J. & Liu, Huju, 2013. "The contributions of search and human capital to earnings growth over the life cycle," European Economic Review, Elsevier, vol. 64(C), pages 305-331.
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