Music in the Air: Estimating the Social Return to Cultural Amenities

Oliver Falck, Michael Fritsch, Stephan Heblich and Anne Otto

No 5183, CESifo Working Paper Series from CESifo

Abstract: If being around smart people makes us smarter and more productive, what can regions do to attract smart people? This paper considers endogenous cultural amenities as a location factor for high-skilled workers. To overcome selection in the provision of cultural amenities, we exploit the variation in contemporaneous cultural amenities stemming from baroque opera houses in Germany that emerged during a time when the decision for an opera house was mainly determined by the ruler’s preferences and rarely by funding constraints. To assess spillovers from high-skilled workers attracted by cultural amenities, we use a 1-percent sample drawn from the population of all West German workers under social security during the period 1975-2010. This panel of individual observations allows us to compare wages of similar individuals who work in locations with different levels of high-skilled workers who are attracted by cultural amenities. To account for non-random selection of workers among cities, we use individual-location fixed effects. Our results show that cultural amenities are an important factor in the location decision of high-skilled workers. The positive effect of the local share of high-skilled workers on unskilled, skilled and high-skilled wages indicates strong and productive spillovers.

Keywords: cultural amenities; social returns; higher education (search for similar items in EconPapers)
JEL-codes: I20 J30 Z10 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Journal Article: Music in the air: estimating the social return to cultural amenities (2018)
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