Communication Externalities in Cities

Abstract

To identify communication externalities in French cities, we exploit a unique survey recording workplace communication of individual workers. Our hypothesis is that in larger and/or more educated cities, workers should communicate more. In turn, more communication should have a positive effect on individual wages. By estimating both an earnings and a communication equation, we find evidence of communication externalities. Being in a larger and more educated city makes workers communicate more and in turn this has a positive effects on wages. Only a small fraction of the overall effects of a more educated and larger city on wages percolates through this channel, however.

Keywords: Human capital, cities, communication externalities

JEL Classification: J31, R19, R29