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Estimating the Skill Bias in Agglomeration Externalities and Social Returns to Education: Evidence from Dutch Matched Worker-Firm Micro-Data

  • Stefan P. T. GrootEmail author
  • Henri L. F. de Groot
Article
  • 12 Downloads

Abstract

This paper employs a unique set of micro-data covering almost one-third of the Dutch labor force, to estimate the heterogeneity of agglomeration externalities across education levels. This paper shows that there is substantial heterogeneity in the relationship between agglomeration and productivity of workers (proxied by their hourly wage) with different educational background. Apart from estimating the impact of the aggregate density of regional labor markets, we also estimate whether the composition of the local labor market in terms of education is related to the productivity of different types of workers. Using the presence of universities as an instrument, we estimate the effect of the supply of university graduates on wages, i.e. the social return to education. We find that agglomeration externalities are substantially higher for high- and medium skilled than for low-skilled employees. We find no positive effects from the presence of high-skilled on the productivity of low-skilled.

Keywords

Agglomeration, Education, Knowledge-spillovers, Wages, Local labor markets 

JEL Classification

J3 I2 

Notes

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.CPB Netherlands Bureau for Economic Policy AnalysisThe HagueThe Netherlands
  2. 2.Department of Spatial EconomicsVrije Universiteit AmsterdamAmsterdamThe Netherlands
  3. 3.Tinbergen InstituteAmsterdam, RotterdamThe Netherlands
  4. 4.Ecorys NEIRotterdamThe Netherlands

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