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Are there social returns to both firm-level and regional human capital? – Evidence from German social security data


  • Nils Braakmann

    () (Institute of Economics, Leuphana University of Lüneburg, Germany)


This paper provides first evidence on the social returns to education from both firm-level and regional human capital. Using panel data from German social security, both at an individual and aggregated at the plant and regional level, I estimate earnings functions incorporating measures of regional and firm-level human capital while controlling for various types of unobserved heterogeneity, demand shocks, regional physical capital and other regional and firm-level confounders. The results suggest negligibly small external returns to the firm-level shares of high-skilled workers. On the regional level, the results show no support for external returns to education, except for skilled workers.

Suggested Citation

  • Nils Braakmann, 2009. "Are there social returns to both firm-level and regional human capital? – Evidence from German social security data," Working Paper Series in Economics 143, University of Lüneburg, Institute of Economics.
  • Handle: RePEc:lue:wpaper:143

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    References listed on IDEAS

    1. Hanson, Gordon H., 1998. "Regional adjustment to trade liberalization," Regional Science and Urban Economics, Elsevier, vol. 28(4), pages 419-444, July.
    2. Alexander Vogel, 2009. "The German Business Services Statistics Panel 2003 to 2007," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 129(3), pages 515-522.
    3. Hartmut Egger & Peter Egger, 2002. "How international outsourcing drives up Eastern European wages," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(1), pages 83-96, March.
    4. Anja Spengler, 2008. "European Data Watch: The Establishment History Panel," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 128(3), pages 501-509.
    5. Braakmann, Nils & Wagner, Joachim, 2009. "Labor Market Adjustments after a Large Import Shock: Evidence from the German Clothing Industry and the Multi-Fibre Arrangement," IZA Discussion Papers 4633, Institute for the Study of Labor (IZA).
    6. Feenstra, Robert C. & Hanson, Gordon H., 1997. "Foreign direct investment and relative wages: Evidence from Mexico's maquiladoras," Journal of International Economics, Elsevier, vol. 42(3-4), pages 371-393, May.
    7. Alexander Vogel, 2009. "Exporter Performance in the German Business Services Sector: First Evidence from the Services Statistics Panel," Working Paper Series in Economics 111, University of Lüneburg, Institute of Economics.
    8. Geishecker, Ingo & Riedl, Maximilian & Frijters, Paul, 2012. "Offshoring and job loss fears: An econometric analysis of individual perceptions," Labour Economics, Elsevier, vol. 19(5), pages 738-747.
    9. Hanson, Gordon H., 1996. "Economic integration, intraindustry trade, and frontier regions," European Economic Review, Elsevier, vol. 40(3-5), pages 941-949, April.
    10. Robert Feenstra & Gordon Hanson, 2001. "Global Production Sharing and Rising Inequality: A Survey of Trade and Wages," NBER Working Papers 8372, National Bureau of Economic Research, Inc.
    11. Nils Braakmann & Alexander Vogel, 2009. "The impact of the 2004 EU-enlargement on enterprise performance and exports of service enterprises in the German eastern border region," Working Paper Series in Economics 124, University of Lüneburg, Institute of Economics.
    12. Spengler, Anja, 2008. "The establishment history panel 1975-2005 : handbook version 2.0.0," FDZ Datenreport. Documentation on Labour Market Data 200704_en, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
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    More about this item


    Human capital externalities; social returns to education; error-component model;

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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