Identifying Human Capital Externalities: Theory with an Application to US Cities

Antonio Ciccone and Giovanni Peri ()

No 3350, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Identification of the strength of human capital externalities at the aggregate level is still not fully understood. The existing method may yield positive or negative externalities even if wages reflect marginal social products. We propose an approach that yields positive average human capital externalities if and only if the marginal social product of workers with above-average human capital exceeds their wage. As an application, we estimate the strength of average-schooling externalities in US cities between 1970 and 1990.

Keywords: cities; human capital externalities; imperfect substitution; marginal social product of human capital; perfect substitution; wages (search for similar items in EconPapers)
JEL-codes: J30 O40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-geo and nep-ure
Date: Written
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Related works:
Working Paper: Identifying Human Capital Externalities: Theory with an Application to US Cities (2002)
Working Paper: Indentifying Human Capital Externalities: Theory with an Application to US Cities (2005)
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