Human Capital Externalities and the Urban WagePremium: Two Literatures and their Interrelations

In this paper we survey the recent developments in two empirical literatures at the crossroadsof labor and urban economics: Studies about localized human capital externalities (HCE) andabout the urban wage premium (UWP). After surveying the methods and main results of eachof these two literatures separately, we highlight several interrelations between them.[...]

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Year of publication:	2008-05-01
Authors:	Halfdanarson, Benedikt ; Heuermann, Daniel F. ; Südekum, Jens
Institutions:	Institut für Arbeitsrecht und Arbeitsbeziehungen in der Europäischen Gemeinschaft <Trier>
Subject:	Humankapital \| Arbeitsmarkt \| Labour Market \| Bonus \| Lohn \| Agglomeration <Wirtschaft> \| agglomeration \| Externer Effekt

1. Introduction
2. The Urban Wage Premium (UWP)
2.1. Sorting, unobserved heterogeneity and ability bias
2.2. Costs of living and the UWP in real terms
2.3. Economic mechanisms behind higher urban labor productivity
2.4. The UWP for different types of workers
2.5. The geographical scope of the UWP
2.6. Spatial sorting of industries and firms as sources of the UWP
3. Human capital externalities (HCE)
3.1. Types of HCE
3.2. Main strategies for identifying HCE
3.3. The Mincerian approach
3.4. Instrumental variable approaches and the endogeneity of education
3.5. Imperfect substitution effects and the constant-composition approach
3.6. Alternative methods of estimating HCE
3.7. Potential reasons for the ambiguity of the evidence on HCE
4. Interrelations Between the HCE and the UWP Literatures
4.1. Symmetric development of the literatures
4.2. Problems and solutions shared by both literatures
4.3. HCE as a cause for the UWP?
5 Summary and Conclusions
References

Persistent link: https://www.econbiz.de/10005868447