Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/167623
Authors: 
Peters, Jan Cornelius
Year of Publication: 
2017
Series/Report no.: 
Economics Working Paper 2017-06
Abstract: 
This paper provides empirical evidence that individual labor productivity significantly depends on the size of the local labor market in which a worker previously acquired work experience. The analysis uses German micro data from the Institute for Employment Research (IAB) on transitions to employment within the period 2005 to 2011 and individual employment biographies from 1975 onwards. Analyzing the wages associated with the newly established employment relationships, suggests that dynamic agglomeration economies in general, and learning externalities in particular, play an important role in explaining individual labor productivity. Workers receive a significantly higher wage after acquiring experience in urban than in non-urban labor markets. Doubling local employment in all labor markets in which experience was acquired, increases the productivity of a worker with two years of work experience by more than 0.7 percent. After 10 years of experience the corresponding gain amounts to about three percent, after 30 years to about four percent.
Subjects: 
Agglomeration economies
Human capital externalities
Learning
Regional disparities
Urban wage growth premium
Transition to employment
JEL: 
R10
R23
J31
Document Type: 
Working Paper
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