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

Author

Listed:
  • Stefan P.T. Groot

    (Centraal Planbureau, The Hague, the Netherlands)

  • Henri L.F. de Groot

    (VU University Amsterdam, the Netherlands)

Abstract
This paper employs a unique set of micro-data covering almost one third of the Dutch labor force, to estimate the relationship between agglomeration externalities and the level of education. While the positive relationship between economic density and productivity and wages has long been established in the economic literature, less is known about the effects of density on the productivity of different types of workers. This paper shows that there is substantial heterogeneity in the relationship between density and productivity for workers with different types of education. Apart from estimating the impact of aggregate density, 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.

Suggested Citation

  • Stefan P.T. Groot & Henri L.F. de Groot, 2014. "Estimating the Skill Bias in Agglomeration Externalities and Social Returns to Education: Evidence from Dutch Matched Worker-Firm Micro-data," Tinbergen Institute Discussion Papers 14-088/VIII, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20140088
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    References listed on IDEAS

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    Cited by:

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    4. Cui, Ying & Martins, Pedro S., 2021. "What drives social returns to education? A meta-analysis," World Development, Elsevier, vol. 148(C).
    5. Edivaldo C. Neves Jr & Carlos R. Azzoni, Andre Chagas, 2017. "Skill wage premium and city size," Working Papers, Department of Economics 2017_19, University of São Paulo (FEA-USP).
    6. Perl, Maximilian, 2023. "Agglomerations, tasks and wage growth," Ruhr Economic Papers 999, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    7. Tania Paola Torres-Gutiérrez & Ronny Correa-Quezada & María de la Cruz del Río-Rama & José Álvarez-García, 2020. "Location Decisions of New Manufacturing Firms in Ecuador. Agglomeration Mechanisms," Mathematics, MDPI, vol. 8(8), pages 1-24, August.

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    More about this item

    Keywords

    agglomeration; education; knowledge-spillovers; wages; local labor markets;
    All these keywords.

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • I2 - Health, Education, and Welfare - - Education

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    This paper has been announced in the following NEP Reports:

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