Human Capital Externalities and the Urban Wage Premium: Two Literatures and Their Interrelations

Halfdanarson, Benedikt; Heuermann, Daniel F.; Suedekum, Jens

doi:10.1111/j.0042-7092.2007.00700.x

Human Capital Externalities and the Urban Wage Premium: Two Literatures and Their Interrelations

39 Pages Posted: 23 May 2008

See all articles by Benedikt Halfdanarson

Heinrich-Heine-University Duesseldorf, Duesseldorf Institute for Competition Economics (DICE); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Institute for the Study of Labor (IZA)

Abstract

In this paper we survey the recent developments in two empirical literatures at the crossroads of labor and urban economics: Studies about localized human capital externalities (HCE) and about the urban wage premium (UWP). After surveying the methods and main results of each of these two literatures separately, we highlight several interrelations between them. In particular we ask if HCE can be interpreted as one fundamental cause of the UWP, and we discuss if one literature can conceptually learn from the methods that are used by the other one.

Keywords: local labor markets, agglomeration, human capital externalities, urban wage premium

JEL Classification: J31, J61, R23, R12

Suggested Citation: Suggested Citation

Halfdanarson, Benedikt and Heuermann, Daniel F. and Südekum, Jens, Human Capital Externalities and the Urban Wage Premium: Two Literatures and Their Interrelations. IZA Working Paper No. 3493, Available at SSRN: https://ssrn.com/abstract=1136294 or http://dx.doi.org/10.1111/j.0042-7092.2007.00700.x