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Benefits of dense labour markets: Evidence from transitions to employment in Germany

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  • Hamann, Silke
  • Niebuhr, Annekatrin
  • Peters, Jan Cornelius

Abstract

We analyse whether the size of the local labour market allows for better matching between job seekers and vacancies, which is thought to enhance productivity. This analysis is based on a large data set providing detailed micro-level information on new employment relationships in Germany. Our results suggest rather small matching benefits. Doubling employment density increases the productivity of new employment relationships by 1.1% to 1.2%. Moreover, the findings indicate that the benefits accrue only to persons experiencing job-to-job transitions and short-term unemployed. We detect no important impact of agglomeration on transitions from long-term non-employed.

Suggested Citation

  • Hamann, Silke & Niebuhr, Annekatrin & Peters, Jan Cornelius, 2016. "Benefits of dense labour markets: Evidence from transitions to employment in Germany," Economics Working Papers 2016-07, Christian-Albrechts-University of Kiel, Department of Economics.
    • Handle: RePEc:zbw:cauewp:201607
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    Cited by:

    1. Peters, Jan Cornelius, 2016. "Quantifying the effect of labor market size on learning externalities," Economics Working Papers 2016-11, Christian-Albrechts-University of Kiel, Department of Economics.

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    More about this item

    Keywords

    agglomeration economies; matching; urban wage premium; transitions to employment;
    All these keywords.

    JEL classification:

    • 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

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