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Wage effects from changes in local human capital in Britain

  • Kaplanis, Ioannis

This paper examines the impact of local human capital on individuals’ wages through external effects. Employing wage regressions, it is found that changes in individuals’ wages are positively associated with changes in the shares of high-paid occupation workers in the British travel-to-work-areas for the late 1990s. I examine this positive association for different occupational groups (defined by pay) in order to disentangle between production function and consumer demand driven theoretical explanations. The wage effect is found to be stronger and significant for the bottom-paid occupational quintile compared to the middle-paid ones, and using also sectoral controls the paper argues to provide evidence for the existence of consumer demand effects.

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File URL: http://hdl.handle.net/2072/179614
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Paper provided by Universitat Rovira i Virgili, Department of Economics in its series Working Papers with number 2072/179614.

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Date of creation: 2011
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Handle: RePEc:urv:wpaper:2072/179614
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  1. Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon, 2008. "Spatial Wage Disparities: Sorting Matters!," Post-Print halshs-00754296, HAL.
  2. Maarten Goos & Alan Manning, 2007. "Lousy and Lovely Jobs: The Rising Polarization of Work in Britain," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 118-133, February.
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  9. Ioannis Kaplanis, 2010. "Local human capital and its impact on local employment chances in Britain," LSE Research Online Documents on Economics 33503, London School of Economics and Political Science, LSE Library.
  10. Edward L. Glaeser & Joshua D. Gottlieb, 2006. "Urban Resurgence and the Consumer City," Urban Studies, Urban Studies Journal Limited, vol. 43(8), pages 1275-1299, July.
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  13. Ioannis Kaplanis, 2006. "The Geography of Employment Polarisation in Britain," ERSA conference papers ersa06p597, European Regional Science Association.
  14. Ian Gordon & Ioannis Kaplanis, 2012. "Accounting for big city growth in low paid occupations: immigration and/or service class consumption," LSE Research Online Documents on Economics 44436, London School of Economics and Political Science, LSE Library.
  15. 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.
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  18. Mazzolari, Francesca & Ragusa, Giuseppe, 2007. "Spillovers from High-Skill Consumption to Low-Skill Labor Markets," IZA Discussion Papers 3048, Institute for the Study of Labor (IZA).
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  21. Stephen Gibbons & Anne Green & Paul Gregg & Stephen Machin, 2005. "Is Britain Pulling Apart? Area Disparities in Employment, Education and Crime," The Centre for Market and Public Organisation 05/120, Department of Economics, University of Bristol, UK.
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  23. Ian R. Gordon & Philip McCann, 2005. "Innovation, agglomeration, and regional development," Journal of Economic Geography, Oxford University Press, vol. 5(5), pages 523-543, October.
  24. 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.
  25. Antonio Ciccone & Giovanni Peri, 2003. "Identifying Human Capital Externalities: Theory with Applications," Working Papers 6, Barcelona Graduate School of Economics.
  26. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  27. Alessandra Faggian & Philip McCann, 2006. "Human capital flows and regional knowledge assets: a simultaneous equation approach," Oxford Economic Papers, Oxford University Press, vol. 58(3), pages 475-500, July.
  28. 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.
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