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Title:Human capital externalities in Western Germany PDF Logo
Authors:Heuermann, Daniel F.
Issue Date:2009
Series/Report no.:IAAEG discussion paper series 03/2009
Abstract:The paper sheds light on the impact of local human capital endowments on individual wages in Western Germany. Using panel data it shows that regional wage differentials are partly attributable to localized human capital externalities arising from the regional share of highly qualified workers. Employing the regional number of public schools and of students as instrumental variables, the paper shows that human capital externalities are underestimated in ordinary panel regressions for highly qualified workers due to supply shifts of workers of different skills. An analysis by sector reveals that human capital externalities are more pronounced in manufacturing than in the service sector. We find indication that highly qualified workers benefit from intraindustry knowledge spillovers, while non-highly qualified workers profit from pecuniary externalities between industries. Our findings are stable among a variety of indicators of regional human capital and robust to the inclusion of other sources of increasing returns, as well as wage curve, price level, and amenity effects.
Subjects:Human Capital Externalities
Agglomeration
Urban Wage Premium
JEL:D62
D83
J24
J31
O15
Document Type:Working Paper
Appears in Collections:IAAEU Discussion Paper Series in Economics, Institut für Arbeitsrecht und Arbeitsbeziehungen in der Europäischen Union, Trier

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