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Endogenous local labour markets, regional aggregation and agglomeration economies

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  • Jordy Meekes
  • Wolter H. J. Hassink
Abstract
We examine the role of spatial unit size in measuring the urban wage premium. Using Dutch administrative data, we define local labour markets (LLMs) based on employees’ commuting outcomes, gender and educational attainment. We show that high-educated employees and male employees have a relatively large LLM. Using a continuum of regional aggregations, we find that urban wage premium estimates increase over the level of aggregation, also for different subgroups of employees. We show that the modifiable areal unit problem (MAUP) does not explain this pattern, consistent with stronger agglomeration externalities at higher regional aggregation levels.

Suggested Citation

  • Jordy Meekes & Wolter H. J. Hassink, 2023. "Endogenous local labour markets, regional aggregation and agglomeration economies," Regional Studies, Taylor & Francis Journals, vol. 57(1), pages 13-25, January.
    • Handle: RePEc:taf:regstd:v:57:y:2023:i:1:p:13-25
    DOI: 10.1080/00343404.2022.2050893
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    1. Petrongolo, Barbara & Ronchi, Maddalena, 2020. "Gender gaps and the structure of local labor markets," Labour Economics, Elsevier, vol. 64(C).
    2. Petrongolo, Barbara & Ronchi, Maddalena, 2020. "A survey of gender gaps through the lens of the industry structure and local labor markets," LSE Research Online Documents on Economics 108438, London School of Economics and Political Science, LSE Library.
    3. Michael Coelli & James Maccarrone & Jeff Borland, 2023. "The dragon Down Under: the regional labour market impact of growth in Chinese imports to Australia," Regional Studies, Taylor & Francis Journals, vol. 57(11), pages 2148-2163, November.
    4. Meekes, Jordy & Hassink, Wolter H.J., 2022. "Gender differences in job flexibility: Commutes and working hours after job loss," Journal of Urban Economics, Elsevier, vol. 129(C).
    5. Weisbrod, Glen & Hensher, David A., 2023. "Improving transportation project evaluation by recognizing the role of spatial scale and context in measuring non-user economic benefits," Transport Policy, Elsevier, vol. 144(C), pages 80-89.
    6. Laws, A., 2020. "Localised employment spillovers," Cambridge Working Papers in Economics 2067, Faculty of Economics, University of Cambridge.
    7. Kenza Elass & Cecilia García-Peñalosa & Christian Schluter & Cecilia Garcia-Peñalosa, 2024. "Gender Gaps in the Urban Wage Premium," CESifo Working Paper Series 11374, CESifo.
    8. Jordy Meekes, 2022. "Agglomeration Economies and the Urban Wage Premium in Australia," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 25(1), pages 25-54.
    9. Eloiza Regina Ferreira de Almeida & Veneziano C. Araujo & Solange Gonçalves, 2024. "Urban wage premium in a labor market with informality," Working Papers, Department of Economics 2024_25, University of São Paulo (FEA-USP), revised 14 Nov 2024.
    10. Almeida, Eloiza R.F. & Araújo, Veneziano & Gonçalves, Solange L., 2022. "Urban wage premium for women: evidence across the wage distribution," World Development, Elsevier, vol. 159(C).

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    8. Niebuhr, Annekatrin, 2016. "Benefits of dense labour markets - Evidence from transitions to employment in Germany," VfS Annual Conference 2016 (Augsburg): Demographic Change 145715, Verein für Socialpolitik / German Economic Association.
    9. Daniel Heuermann & Benedikt Halfdanarson & Jens Suedekum, 2010. "Human Capital Externalities and the Urban Wage Premium: Two Literatures and their Interrelations," Urban Studies, Urban Studies Journal Limited, vol. 47(4), pages 749-767, April.
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    16. Guangliang Yang & Lixing Li & Shihe Fu, 2020. "Do rural migrants benefit from labor market agglomeration economies? Evidence from Chinese cities," Growth and Change, Wiley Blackwell, vol. 51(3), pages 910-931, September.
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    More about this item

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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