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Agglomeration and job matching among college graduates

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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. Segal, David, 1976. "Are There Returns to Scale in City Size?," The Review of Economics and Statistics, MIT Press, vol. 58(3), pages 339-350, August.
  2. Marcus Berliant & Robert R Reed & Ping Wang, 2003. "Knowledge Exchange, Matching, and Agglomeration," Levine's Bibliography 666156000000000395, UCLA Department of Economics.
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  4. Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon, 2008. "Spatial Wage Disparities: Sorting Matters!," Post-Print halshs-00754296, HAL.
  5. Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon & Sébastien Roux, 2008. "Estimating Agglomeration Economies With History, Geology, And Worker Effects," Working Papers halshs-00347451, HAL.
  6. Miller, Robert A, 1984. "Job Matching and Occupational Choice," Journal of Political Economy, University of Chicago Press, vol. 92(6), pages 1086-1120, December.
  7. Joseph G. Altonji & Erica Blom & Costas Meghir, 2012. "Heterogeneity in Human Capital Investments: High School Curriculum, College Major, and Careers," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 185-223, 07.
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  9. Hersch, Joni, 1991. "Education Match and Job Match," The Review of Economics and Statistics, MIT Press, vol. 73(1), pages 140-144, February.
  10. Duranton, Gilles & Puga, Diego, 2003. "Microfoundations of Urban Agglomeration Economies," CEPR Discussion Papers 4062, C.E.P.R. Discussion Papers.
  11. Andini, Monica & de Blasio, Guido & Duranton, Gilles & Strange, William C., 2013. "Marshallian labour market pooling: Evidence from Italy," Regional Science and Urban Economics, Elsevier, vol. 43(6), pages 1008-1022.
  12. Sato, Yasuhiro, 2001. "Labor Heterogeneity in an Urban Labor Market," Journal of Urban Economics, Elsevier, vol. 50(2), pages 313-337, September.
  13. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 49, pages 2119-2171 Elsevier.
  14. Jaison R. Abel & Ishita Dey & Todd M. Gabe, 2010. "Productivity and the density of human capital," Working Papers 2010/30, Institut d'Economia de Barcelona (IEB).
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  16. Andersson, Fredrik & Burgess, Simon & Lane, Julia, 2004. "Cities, Matching and the Productivity Gains of Agglomeration," CEPR Discussion Papers 4598, C.E.P.R. Discussion Papers.
  17. Pierre-Philippe Combes & Laurent Gobillon, 2014. "The empirics of agglomeration economies," Sciences Po publications 10174, Sciences Po.
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  23. Hoyt Bleakley & Jeffrey Lin, 2007. "Thick-market effects and churning in the labor market: evidence from U.S. cities," Working Papers 07-23, Federal Reserve Bank of Philadelphia.
  24. Melo, Patricia C. & Graham, Daniel J. & Noland, Robert B., 2009. "A meta-analysis of estimates of urban agglomeration economies," Regional Science and Urban Economics, Elsevier, vol. 39(3), pages 332-342, May.
  25. Acemoglu, Daron & Autor, David, 2011. "Skills, Tasks and Technologies: Implications for Employment and Earnings," Handbook of Labor Economics, Elsevier.
  26. 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.
  27. Robst, John, 2007. "Education and job match: The relatedness of college major and work," Economics of Education Review, Elsevier, vol. 26(4), pages 397-407, August.
  28. Diego Puga, 2009. "The magnitude and causes of agglomeration economies," Working Papers 2009-09, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
  29. Leo Sveikauskas, 1975. "The Productivity of Cities," The Quarterly Journal of Economics, Oxford University Press, vol. 89(3), pages 393-413.
  30. Dora L. Costa & Matthew E. Kahn, 2000. "Power Couples: Changes in the Locational Choice of the College Educated, 1940–1990," The Quarterly Journal of Economics, Oxford University Press, vol. 115(4), pages 1287-1315.
  31. Di Addario, Sabrina, 2011. "Job search in thick markets," Journal of Urban Economics, Elsevier, vol. 69(3), pages 303-318, May.
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