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Market Thickness and the Early Labor Market Career of University Graduates- An urban advantage?


  • Ahlin, Lina

    () (CIRCLE, Lund University)

  • Andersson, Martin

    () (CIRCLE, Lund University)

  • Thulin, Per

    () (Royal Institute of Technology and Swedish Entrepreneurship Forum)


We analyze the influence of market thickness for skills on initial wages and subsequent wage development of university graduates. Using Swedish micro-level panel data on a cohort of graduates, we show that two out of three graduates move to large cities upon graduation. Large cities yield higher rewards to human capital and a stronger early job market career. The premium on initial wages for urban graduates is in the interval of 6-12 percent, and we estimate a wage-growth premium of about 3 percent. Thicker markets for skills appear as a key reason for the concentration of university graduates to larger cities.

Suggested Citation

  • Ahlin, Lina & Andersson, Martin & Thulin, Per, 2013. "Market Thickness and the Early Labor Market Career of University Graduates- An urban advantage?," Papers in Innovation Studies 2013/2, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy.
  • Handle: RePEc:hhs:lucirc:2013_002

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    Cited by:

    1. Arthur Grimes & Shaan Badenhorst & David C. Maré & Jacques Poot, 2020. "Hometown whanau or big city millennials? The economic geography of graduate destination choices in New Zealand," Working Papers 20_04, Motu Economic and Public Policy Research.
    2. Larsson, Johan P. & Wennberg, Karl & Wiklund, Johan & Wright, Mike, 2017. "Location choices of graduate entrepreneurs," Research Policy, Elsevier, vol. 46(8), pages 1490-1504.
    3. Knutsson, Polina, 2018. "Sorting on Unobserved Skills into New Firms," Working Papers 2018:38, Lund University, Department of Economics.
    4. Fredrik Carlsen & Jorn Rattso & Hildegunn E. Stokke, 2013. "Education, experience and dynamic urban wage premium," Working Paper Series 15213, Department of Economics, Norwegian University of Science and Technology.
    5. Niclas Lavesson, 2017. "When And How Does Commuting To Cities Influence Rural Employment Growth?," Journal of Regional Science, Wiley Blackwell, vol. 57(4), pages 631-654, September.
    6. Andersson, Martin & Henrekson, Magnus, 2014. "Local Competitiveness Fostered through Local Institutions for Entrepreneurship," Working Paper Series 1020, Research Institute of Industrial Economics.
    7. Eliasson, Kent & Westerlund, Olle, 2019. "Graduate migration, self-selection and urban wage premiums across the regional hierarchy," Umeå Economic Studies 962, Umeå University, Department of Economics.
    8. Martin Andersson & Johan Klaesson & Johan P. Larsson, 2016. "How Local are Spatial Density Externalities? Neighbourhood Effects in Agglomeration Economies," Regional Studies, Taylor & Francis Journals, vol. 50(6), pages 1082-1095, June.

    More about this item


    human capital; university graduates; urban wage premium; market thickness; matching; agglomeration economies; migration; job switching;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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