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Market Thickness and the Early Labour Market Career of University Graduates: An Urban Advantage?

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  • Lina Ahlin
  • Martin Andersson
  • Per Thulin

Abstract

We analyse the influence of market thickness for skills on initial wages and the early job market career of university graduates. Using Swedish micro-level panel data on a cohort of graduates, we show that two out of three graduates move to large cities upon graduation. Large cities increase employment probabilities and yield higher rewards to human capital, even after controlling for employment selection. The premium on initial wages for graduates in urban regions is in the interval of 5–6%, and we estimate a wage-growth premium of about 2–4%. Thicker markets for skills appear as a key reason for the concentration of graduates to larger cities.

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  • Lina Ahlin & Martin Andersson & Per Thulin, 2014. "Market Thickness and the Early Labour Market Career of University Graduates: An Urban Advantage?," Spatial Economic Analysis, Taylor & Francis Journals, vol. 9(4), pages 396-419, October.
    • Handle: RePEc:taf:specan:v:9:y:2014:i:4:p:396-419
    DOI: 10.1080/17421772.2014.961534
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    1. 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.
    2. J. V. Henderson & J. F. Thisse (ed.), 2004. "Handbook of Regional and Urban Economics," Handbook of Regional and Urban Economics, Elsevier, edition 1, volume 4, number 4.
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    Cited by:

    1. Magdalena Kozera-Kowalska & Jarosław Uglis, 2021. "Students’ Perception of Education as a Preparation to Enter the Labour Market: A Case Study from a Polish University," European Research Studies Journal, European Research Studies Journal, vol. 0(3B), pages 338-349.
    2. Arthur Grimes & Shaan Badenhorst & David C. Maré & Jacques Poot, 2020. "Hometown wh?nau or big city millennials? The economic geography of graduate destination choices in New Zealand," Working Papers 20_04, Motu Economic and Public Policy Research.
    3. Larsson, Johan P. & Wennberg, Karl & Wiklund, Johan & Wright, Mike, 2017. "Location choices of graduate entrepreneurs," Research Policy, Elsevier, vol. 46(8), pages 1490-1504.
    4. Knutsson, Polina, 2018. "Sorting on Unobserved Skills into New Firms," Working Papers 2018:38, Lund University, Department of Economics.
    5. Chung-Shing Chan, 2023. "From the perspective of local brand equity, how do citizens perceive green, creative and smart brand potential of future Hong Kong?," Place Branding and Public Diplomacy, Palgrave Macmillan, vol. 19(4), pages 500-513, December.
    6. Kent Eliasson & Olle Westerlund, 2023. "The urban wage premium and spatial sorting on observed and unobserved ability," Journal of Economic Geography, Oxford University Press, vol. 23(3), pages 601-627.
    7. Niclas Lavesson, 2017. "When And How Does Commuting To Cities Influence Rural Employment Growth?," Journal of Regional Science, Wiley Blackwell, vol. 57(4), pages 631-654, September.
    8. Martin Andersson & Johan Klaesson & Johan P. Larsson, 2016. "How Local are Spatial Density Externalities? Neighbourhood Effects in Agglomeration Economies," Regional Studies, Taylor & Francis Journals, vol. 50(6), pages 1082-1095, June.
    9. Orsa Kekezi & Ron Boschma, 2021. "Returns to migration after job loss—The importance of job match," Environment and Planning A, , vol. 53(6), pages 1565-1587, September.
    10. Fredrik Carlsen & Jorn Rattso & Hildegunn E. Stokke, 2013. "Education, experience and dynamic urban wage premium," Working Paper Series 15213, Department of Economics, Norwegian University of Science and Technology.
    11. Andersson, Martin & Henrekson, Magnus, 2014. "Local Competitiveness Fostered through Local Institutions for Entrepreneurship," Working Paper Series 1020, Research Institute of Industrial Economics.
    12. Galster, George C. & Osland, Liv, 2024. "Educational and gender heterogeneity of the rural-urban earnings premium: New evidence from Norway," Regional Science and Urban Economics, Elsevier, vol. 105(C).
    13. Korpi, Martin & Halvarsson, Daniel, 2023. "City Size, Employer Concentration, and Wage Income Inequality," Ratio Working Papers 363, The Ratio Institute.
    14. Arthur Grimes & Shaan Badenhorst & David C. Maré & Jacques Poot & Isabelle Sin, 2023. "Quality of life, quality of business, and destinations of recent graduates: fields of study matter," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 70(1), pages 55-80, February.
    15. Eliasson, Kent & Westerlund, Olle, 2019. "Graduate migration, self-selection and urban wage premiums across the regional hierarchy," Umeå Economic Studies 962, Umeå University, Department of Economics.
    16. Hooijen, Inge & Bijlsma, Ineke & Cörvers, Frank & Poulissen, Davey, 2020. "The geographical psychology of recent graduates in the Netherlands: Relating environmental factors and personality traits to location choice," ROA Research Memorandum 001, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    17. Kent Eliasson & Olle Westerlund, 2023. "The urban wage premium and spatial sorting on observed and unobserved ability," Journal of International Economic Law, Oxford University Press, vol. 23(3), pages 601-627.
    18. Ida Lovén & Cecilia Hammarlund & Martin Nordin, 2020. "Staying or leaving? The effects of university availability on educational choices and rural depopulation," Papers in Regional Science, Wiley Blackwell, vol. 99(5), pages 1339-1365, October.

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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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