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Endogenous Local Labour Markets, Regional Aggregation and Agglomeration Economies

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  • Meekes, Jordy

    () (University of Melbourne)

  • Hassink, Wolter

    () (Utrecht University)

Abstract

This paper examines the role of regional aggregation in measuring agglomeration externalities. Using Dutch administrative data, we define local labour markets (LLMs) based on the worker's commuting outcomes, gender and educational attainment, and show that high-educated workers and male workers are characterised by a relatively large LLM. We find that the effect of employment density on workers' wages increases in the level of regional aggregation, explained by larger agglomeration externalities at a higher spatial scale. We quantify subgroup differentials and find that high-educated workers have agglomeration externalities twice as high as low-educated workers. We show that workers who lose their job in denser LLMs experience positive agglomeration externalities on job matching, with more modest losses in wages and again larger density effects at higher levels of regional aggregation.

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  • Meekes, Jordy & Hassink, Wolter, 2019. "Endogenous Local Labour Markets, Regional Aggregation and Agglomeration Economies," IZA Discussion Papers 12765, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp12765
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    Cited by:

    1. Petrongolo, Barbara & Ronchi, Maddalena, 2020. "Gender gaps and the structure of local labor markets," Labour Economics, Elsevier, vol. 64(C).
    2. Laws, A., 2020. "Localised employment spillovers," Cambridge Working Papers in Economics 2067, Faculty of Economics, University of Cambridge.

    More about this item

    Keywords

    urban wage premium; job loss; local labour markets; commuting; agglomeration;

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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