Identification of the strength of human capital externalities at the aggregate level is still not fully understood. The … existing method may yield positive or negative externalities even if wages reflect marginal social products. We propose an … approach that yields positive average human capital externalities if and only if the marginal social product of workers with …

-linked externalities (JLEs). JLEs emerge when wages exceed the opportunity cost of labor (labor externalities), or when there are social … gains from creating better jobs for some classes of worker, such as women or youth (social externalities). Like all … externalities, JLEs create a gap between private and social rates of return. Investments can be socially profitable (once the …