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Disaggregating Density A Knowledge Spillover Analysis Using Geo-Coded Data

  • Johan P Larsson

    ()

This paper exploits a geocoded, publicly audited, full population dataset on employment and wages in Sweden’s city areas, to analyze the relationship between density of economic activity and individual wages. The analysis is based on 250-by-250 meter (about 0.15 miles), 1 km2, 9 km2 and 100 km2 squares. Fixed effects individual-level wage regressions confirm that workers are positively affected by proximity to economic activity, but that the results are dependent on spatial resolution. A doubling of density in a 250 meter square is associated with a 3.7 percent increase in wages, holding individual characteristics and industry structure constant. Basing the analysis on any of the larger squares decreases the elasticity by about one third, confirming the modifiable areal unit problem, and lending support to arguments in favor of the attenuation of human capital spillover effects.

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File URL: http://www-sre.wu.ac.at/ersa/ersaconfs/ersa12/e120821aFinal00932.pdf
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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa12p930.

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Date of creation: Oct 2012
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Handle: RePEc:wiw:wiwrsa:ersa12p930
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  1. Paul Romer, 1989. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
  2. 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.
  3. Börje Johansson & Johan Klaesson & Michael Olsson, 2003. "Commuters’ non-linear response to time distances," Journal of Geographical Systems, Springer, vol. 5(3), pages 315-329, November.
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  5. Alexandre Mas & Enrico Moretti, 2009. "Peers at Work," American Economic Review, American Economic Association, vol. 99(1), pages 112-45, March.
  6. 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.
  7. Andersson, Martin & Klaesson, Johan, 2006. "Regional Interaction & Economic Diversity - exploring the role of geographically overlapping markets for a municipality’s diversity in retail and durables," Working Paper Series in Economics and Institutions of Innovation 49, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  8. Antonio Ciccone & Robert E. Hall, 1993. "Productivity and the Density of Economic Activity," NBER Working Papers 4313, National Bureau of Economic Research, Inc.
  9. 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.
  10. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-78, December.
  11. Jovanovic, Boyan & Rob, Rafael, 1989. "The Growth and Diffusion of Knowledge," Review of Economic Studies, Wiley Blackwell, vol. 56(4), pages 569-82, October.
  12. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, December.
  13. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  14. Martin Andersson & Urban Gråsjö, 2009. "Spatial dependence and the representation of space in empirical models," The Annals of Regional Science, Springer, vol. 43(1), pages 159-180, March.
  15. Glaeser, Edward L., 1999. "Learning in Cities," Journal of Urban Economics, Elsevier, vol. 46(2), pages 254-277, September.
  16. Rosenthal, Stuart S. & Strange, William C., 2001. "The Determinants of Agglomeration," Journal of Urban Economics, Elsevier, vol. 50(2), pages 191-229, September.
  17. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
  18. Helsley, Robert W. & Strange, William C., 1990. "Matching and agglomeration economies in a system of cities," Regional Science and Urban Economics, Elsevier, vol. 20(2), pages 189-212, September.
  19. Roberta Capello, 2002. "Entrepreneurship and spatial externalities: Theory and measurement," The Annals of Regional Science, Springer, vol. 36(3), pages 387-402.
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