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

Antonio Ciccone and Giovanni Peri

No 488, IZA Discussion Papers from Institute of Labor Economics (IZA)

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 aboveaverage human capital exceeds their wage. As an application, we estimate the strength of average-schooling externalities in US cities between 1970 and 1990.

Keywords: wages; marginal social product of human capital; human capital externalities (search for similar items in EconPapers)
JEL-codes: J3 O0 O4 R0 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2002-04
New Economics Papers: this item is included in nep-dev and nep-lab
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Citations: View citations in EconPapers (61)

Published - published in: Review of Economic Studies, 73 (2), 2006, 381-412

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Related works:
Working Paper: Indentifying human capital externalities: Theory with an application to US cities (2005)
Working Paper: Identifying Human Capital Externalities: Theory with an Application to US Cities (2002)
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