Quantifying the effect of labor market size on learning externalities

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Economics Working Paper ; No. 2017-06

Classification and Topics

• Classification: Wirtschaft ; General Regional Economics (includes Regional Data) ; Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics ; Wage Level and Structure; Wage Differentials
• Subject: Agglomeration economies ; Human capital externalities ; Learning ; Regional disparities ; Urban wage growth premium ; Transition to employment

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Peters, Jan Cornelius
• Event: Veröffentlichung
• (who): Kiel University, Department of Economics
• (where): Kiel
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/167623
• Last update: 10.03.2025, 11:41 AM CET