IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/22434.html
   My bibliography  Save this paper

Human Capital Externalities and Employment Differences across Metropolitan Areas of the U.S

Author

Listed:
  • Winters, John V

Abstract

It has been well documented that employment outcomes often differ considerably across areas. This paper examines the extent to which the local human capital level, measured as the share of adults with a college degree, has positive external effects on labor force participation and employment for U.S. metropolitan area residents. We find that the local human capital level has positive externalities on participation for women, but an inconsistent effect on participation for men. However, the local human capital level reduces unemployment for both men and women. We also find that less educated workers generally receive the largest external benefits.

Suggested Citation

  • Winters, John V, 2010. "Human Capital Externalities and Employment Differences across Metropolitan Areas of the U.S," MPRA Paper 22434, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:22434
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/22434/1/MPRA_paper_22434.pdf
    File Function: original version
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Antonio Ciccone & Giovanni Peri, 2006. "Identifying Human-Capital Externalities: Theory with Applications," Review of Economic Studies, Oxford University Press, vol. 73(2), pages 381-412.
    2. Richard Florida, 2002. "Bohemia and economic geography," Journal of Economic Geography, Oxford University Press, vol. 2(1), pages 55-71, January.
    3. Fu, Shihe, 2007. "Smart Cafe Cities: Testing human capital externalities in the Boston metropolitan area," Journal of Urban Economics, Elsevier, vol. 61(1), pages 86-111, January.
    4. Berry, Christopher R. & Glaeser, Edward L., 2005. "Divergence of Human Capital Levels across Cities," Working Paper Series rwp05-057, Harvard University, John F. Kennedy School of Government.
    5. Lawrence F. Katz & Kevin M. Murphy, 1992. "Changes in Relative Wages, 1963–1987: Supply and Demand Factors," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 35-78.
    6. Ioannis Kaplanis, 2010. "Local Human Capital and Its Impact on Local Employment Chances in Britain," SERC Discussion Papers 0040, Spatial Economics Research Centre, LSE.
    7. Abigail Wozniak, 2010. "Are College Graduates More Responsive to Distant Labor Market Opportunities?," Journal of Human Resources, University of Wisconsin Press, vol. 45(4), pages 944-970.
    8. Milligan, Kevin & Moretti, Enrico & Oreopoulos, Philip, 2004. "Does education improve citizenship? Evidence from the United States and the United Kingdom," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1667-1695, August.
    9. Berliant, Marcus & Reed III, Robert R. & Wang, Ping, 2006. "Knowledge exchange, matching, and agglomeration," Journal of Urban Economics, Elsevier, vol. 60(1), pages 69-95, July.
    10. Jesse M. Shapiro, 2006. "Smart Cities: Quality of Life, Productivity, and the Growth Effects of Human Capital," The Review of Economics and Statistics, MIT Press, vol. 88(2), pages 324-335, May.
    11. Moretti, Enrico, 2004. "Estimating the social return to higher education: evidence from longitudinal and repeated cross-sectional data," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 175-212.
    12. Winters, John V., 2009. "Wages and prices: Are workers fully compensated for cost of living differences?," Regional Science and Urban Economics, Elsevier, vol. 39(5), pages 632-643, September.
    13. George Psacharopoulos & Harry Anthony Patrinos, 2004. "Returns to investment in education: a further update," Education Economics, Taylor & Francis Journals, vol. 12(2), pages 111-134.
    14. Boyan Jovanovic & Rafael Rob, 1989. "The Growth and Diffusion of Knowledge," Review of Economic Studies, Oxford University Press, vol. 56(4), pages 569-582.
    15. Adela Nistor, 2009. "Assessing the Effectiveness of Human Capital Investments on the Regional Unemployment Rate in the United States: 1990 and 2000," International Regional Science Review, , vol. 32(1), pages 65-91, January.
    16. Francesca Mazzolari & Giuseppe Ragusa, 2013. "Spillovers from High-Skill Consumption to Low-Skill Labor Markets," The Review of Economics and Statistics, MIT Press, vol. 95(1), pages 74-86, March.
    17. Glaeser, Edward L., 1999. "Learning in Cities," Journal of Urban Economics, Elsevier, vol. 46(2), pages 254-277, September.
    18. repec:hoo:wpaper:e-95-4 is not listed on IDEAS
    19. Lange, Fabian & Topel, Robert, 2006. "The Social Value of Education and Human Capital," Handbook of the Economics of Education, Elsevier.
    20. Winters, John V., 2011. "Human capital, higher education institutions, and quality of life," Regional Science and Urban Economics, Elsevier, vol. 41(5), pages 446-454, September.
    21. Wheeler, Christopher H, 2001. "Search, Sorting, and Urban Agglomeration," Journal of Labor Economics, University of Chicago Press, vol. 19(4), pages 879-899, October.
    22. Edward L. Glaeser & Albert Saiz, 2003. "The rise of the skilled city," Working Papers 04-2, Federal Reserve Bank of Philadelphia.
    23. Marigee Bacolod & Bernardo S. Blum & William C. Strange, 2010. "Elements Of Skill: Traits, Intelligences, Education, And Agglomeration," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 245-280.
    24. Dan A. Black & Natalia A. Kolesnikova & Lowell J. Taylor, 2009. "Local price variation and labor supply behavior," Review, Federal Reserve Bank of St. Louis, issue Nov, pages 613-626.
    25. Wheeler, Christopher H., 2006. "Cities and the growth of wages among young workers: Evidence from the NLSY," Journal of Urban Economics, Elsevier, vol. 60(2), pages 162-184, September.
    26. Simon, Curtis J., 2004. "Industrial reallocation across US cities, 1977-1997," Journal of Urban Economics, Elsevier, vol. 56(1), pages 119-143, July.
    27. Lance Lochner & Enrico Moretti, 2004. "The Effect of Education on Crime: Evidence from Prison Inmates, Arrests, and Self-Reports," American Economic Review, American Economic Association, vol. 94(1), pages 155-189, March.
    28. Richard Florida & Charlotta Mellander & Kevin Stolarick, 2008. "Inside the black box of regional development: human capital, the creative class and tolerance," Journal of Economic Geography, Oxford University Press, vol. 8(5), pages 615-649, September.
    29. Robert Shimer, 2001. "The Impact of Young Workers on the Aggregate Labor Market," The Quarterly Journal of Economics, Oxford University Press, vol. 116(3), pages 969-1007.
    30. Simon, Curtis J. & Nardinelli, Clark, 2002. "Human capital and the rise of American cities, 1900-1990," Regional Science and Urban Economics, Elsevier, vol. 32(1), pages 59-96, January.
    31. Jaison R. Abel & Richard Deitz, 2012. "Do colleges and universities increase their region's human capital?," Journal of Economic Geography, Oxford University Press, vol. 12(3), pages 667-691, May.
    32. Simon, Curtis J., 1998. "Human Capital and Metropolitan Employment Growth," Journal of Urban Economics, Elsevier, vol. 43(2), pages 223-243, March.
    33. Susana Iranzo & Giovanni Peri, 2009. "Schooling Externalities, Technology, and Productivity: Theory and Evidence from U.S. States," The Review of Economics and Statistics, MIT Press, vol. 91(2), pages 420-431, May.
    34. Duncan Black & Vernon Henderson, 1999. "A Theory of Urban Growth," Journal of Political Economy, University of Chicago Press, vol. 107(2), pages 252-284, April.
    35. Alan Manning, 2004. "We Can Work It Out: The Impact of Technological Change on the Demand for Low-Skill Workers," Scottish Journal of Political Economy, Scottish Economic Society, vol. 51(5), pages 581-608, November.
    36. Glaeser, Edward L & Mare, David C, 2001. "Cities and Skills," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 316-342, April.
    37. Glaeser, Edward L. & Scheinkman, JoseA. & Shleifer, Andrei, 1995. "Economic growth in a cross-section of cities," Journal of Monetary Economics, Elsevier, vol. 36(1), pages 117-143, August.
    38. Diamond, Charles A & Simon, Curtis J, 1990. "Industrial Specialization and the Returns to Labor," Journal of Labor Economics, University of Chicago Press, vol. 8(2), pages 175-201, April.
    39. Doms, Mark & Lewis, Ethan & Robb, Alicia, 2010. "Local labor force education, new business characteristics, and firm performance," Journal of Urban Economics, Elsevier, vol. 67(1), pages 61-77, January.
    40. J. Paul Elhorst, 2003. "The Mystery of Regional Unemployment Differentials: Theoretical and Empirical Explanations," Journal of Economic Surveys, Wiley Blackwell, vol. 17(5), pages 709-748, December.
    41. Compton, Janice & Pollak, Robert A., 2014. "Family proximity, childcare, and women’s labor force attachment," Journal of Urban Economics, Elsevier, vol. 79(C), pages 72-90.
    42. Mark Partridge & Dan Rickman, 1997. "The Dispersion of US State Unemployment Rates: The Role of Market and Non-market Equilibrium Factors," Regional Studies, Taylor & Francis Journals, vol. 31(6), pages 593-606.
    43. Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2008. "Spatial wage disparities: Sorting matters!," Journal of Urban Economics, Elsevier, vol. 63(2), pages 723-742, March.
    44. Rosenthal, Stuart S. & Strange, William C., 2008. "The attenuation of human capital spillovers," Journal of Urban Economics, Elsevier, vol. 64(2), pages 373-389, September.
    45. Rauch James E., 1993. "Productivity Gains from Geographic Concentration of Human Capital: Evidence from the Cities," Journal of Urban Economics, Elsevier, vol. 34(3), pages 380-400, November.
    46. Curtis J. Simon, 1988. "Frictional Unemployment and the Role of Industrial Diversity," The Quarterly Journal of Economics, Oxford University Press, vol. 103(4), pages 715-728.
    47. Alberto Dalmazzo & Guido Blasio, 2007. "Production and consumption externalities of human capital: an empirical study for Italy," Journal of Population Economics, Springer;European Society for Population Economics, vol. 20(2), pages 359-382, April.
    48. Chinhui Juhn & Kevin M. Murphy & Robert H. Topel, 1991. "Why Has the Natural Rate of Unemployment Increased over Time?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(2), pages 75-142.
    49. Kevin Milligan & Enrico Moretti & Philip Oreopoulos, 2003. "Does Education Improve Citizenship? Evidence from the U.S. and the U.K," NBER Working Papers 9584, National Bureau of Economic Research, Inc.
    50. Blackaby, D H & Manning, D N, 1992. "Regional Earnings and Unemployment--A Simultaneous Approach," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(4), pages 481-501, November.
    51. Christopher R. Berry & Edward L. Glaeser, 2005. "The divergence of human capital levels across cities," Papers in Regional Science, Wiley Blackwell, vol. 84(3), pages 407-444, August.
    52. Alberto Dalmazzo & Guido Blasio, 2007. "Social returns to education in Italian local labor markets," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 41(1), pages 51-69, March.
    53. Alan Manning, 2004. "We Can Work It Out: the Impact of Technological Change on the Demand for Low Skill Workers," CEP Discussion Papers dp0640, Centre for Economic Performance, LSE.
    54. Christopher R. Berry & Edward L. Glaeser, 2005. "The Divergence of Human Capital Levels across Cities," Harvard Institute of Economic Research Working Papers 2091, Harvard - Institute of Economic Research.
    55. George R. Neumann & Robert H. Topel, 1991. "Employment Risk, Diversification, and Unemployment," The Quarterly Journal of Economics, Oxford University Press, vol. 106(4), pages 1341-1365.
    56. Chen, Yong & Rosenthal, Stuart S., 2008. "Local amenities and life-cycle migration: Do people move for jobs or fun?," Journal of Urban Economics, Elsevier, vol. 64(3), pages 519-537, November.
    57. John V. Winters, 2011. "Why Are Smart Cities Growing? Who Moves And Who Stays," Journal of Regional Science, Wiley Blackwell, vol. 51(2), pages 253-270, May.
    58. Christopher R. Berry & Edward L. Glaeser, 2005. "The Divergence of Human Capital Levels Across Cities," NBER Working Papers 11617, National Bureau of Economic Research, Inc.
    59. Vernon Henderson, J., 2007. "Understanding knowledge spillovers," Regional Science and Urban Economics, Elsevier, vol. 37(4), pages 497-508, July.
    60. Bacolod, Marigee & Blum, Bernardo S. & Strange, William C., 2009. "Skills in the city," Journal of Urban Economics, Elsevier, vol. 65(2), pages 136-153, March.
    61. Daron Acemoglu, 1996. "A Microfoundation for Social Increasing Returns in Human Capital Accumulation," The Quarterly Journal of Economics, Oxford University Press, vol. 111(3), pages 779-804.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Camilo Alberto Cárdenas Hurtado & María Alejandra Hernández Montes & Jhon Edwar Torres Gorron, 2015. "A Statistical Analysis of Heterogeneity on Labour Markets and Unemployment Rates in Colombia," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE, August.
    2. Di Cataldo, Marco & Rodríguez-Pose, Andrés, 2016. "What drives employment growth and social inclusion in EU regions," LSE Research Online Documents on Economics 68510, London School of Economics and Political Science, LSE Library.
    3. Ishwarya Balasubramanian, 2016. "Local skill concentrations and district employment growth: a simultaneous equation approach for India," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(2), pages 491-511, March.
    4. Georgeanne M. Artz & Younjun Kim & Peter F. Orazem, 2016. "Does Agglomeration Matter Everywhere?: New Firm Location Decisions In Rural And Urban Markets," Journal of Regional Science, Wiley Blackwell, vol. 56(1), pages 72-95, January.
    5. John V. Winters, 2017. "Do earnings by college major affect graduate migration?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 59(3), pages 629-649, November.
    6. Gordon L. Clark, 2016. "The Components of Talent: Company Size and Financial Centres in the European Investment Management Industry," Regional Studies, Taylor & Francis Journals, vol. 50(1), pages 168-181, January.
    7. Winters, John V., 2014. "STEM graduates, human capital externalities, and wages in the U.S," Regional Science and Urban Economics, Elsevier, vol. 48(C), pages 190-198.
    8. John Winters, 2012. "Differences in employment outcomes for college town stayers and leavers," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-17, December.
    9. Blomquist Glenn C. & Troske Kenneth R. & Coomes Paul A. & Jepsen Christopher & Koford Brandon C., 2014. "Estimating the social value of higher education: willingness to pay for community and technical colleges," Journal of Benefit-Cost Analysis, De Gruyter, vol. 5(1), pages 1-39, January.
    10. Winters, John V., 2014. "The Production and Stock of College Graduates for U.S. States," IZA Discussion Papers 8730, Institute for the Study of Labor (IZA).
    11. repec:iab:iabdpa:201803 is not listed on IDEAS
    12. John V. Winters, 2017. "Do Native STEM Graduates Increase Innovation? Evidence from U.S. Metropolitan Areas," Economics Working Paper Series 1714, Oklahoma State University, Department of Economics and Legal Studies in Business.
    13. Sjoquist, David L. & Winters, John V., 2014. "Merit aid and post-college retention in the state," Journal of Urban Economics, Elsevier, vol. 80(C), pages 39-50.
    14. Thönnessen, Rasmus, 2014. "Human capital externalities vs. substitution effects as determinants of regional wages: Evidence from German micro data," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100345, Verein für Socialpolitik / German Economic Association.
    15. David L. Sjoquist & John V. Winters, 2015. "State Merit-Based Financial Aid Programs And College Attainment," Journal of Regional Science, Wiley Blackwell, vol. 55(3), pages 364-390, June.
    16. John V. Winters, 2015. "Do higher levels of education and skills in an area benefit wider society?," IZA World of Labor, Institute for the Study of Labor (IZA), pages 130-130, March.
    17. Camilo Alberto Cárdenas Hurtado & María Alejandra Hernández Montes & Jhon Edwar Torres Gorron, 2014. "An Exploratory Analysis of Heterogeneity on Regional Labour Markets and Unemployment Rates in Colombia: An MFACT approach," Borradores de Economia 802, Banco de la Republica de Colombia.
    18. Ipsita Roy & Davide Consoli, 2015. "Employment Polarization in Germany: Role of Technology, Trade and Human Capital," Jena Economic Research Papers 2015-017, Friedrich-Schiller-University Jena.
    19. Yuming Fu & Yang Hao, 2015. "An Urban Accounting for Geographic Concentration of Skills and Welfare Inequality," ERSA conference papers ersa15p734, European Regional Science Association.
    20. Howley, P.; & Knight, S.;, 2018. "Taking pleasure from neighbours’ misfortune: Comparison effects, social norms and the well-being of the unemployed," Health, Econometrics and Data Group (HEDG) Working Papers 18/02, HEDG, c/o Department of Economics, University of York.
    21. Winters, John V., 2014. "Foreign and Native-Born STEM Graduates and Innovation Intensity in the United States," IZA Discussion Papers 8575, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    employment; unemployment; human capital externalities; agglomeration;

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:22434. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.