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Music in the air: estimating the social return to cultural amenities

Oliver Falck (), Michael Fritsch (), Stephan Heblich () and Anne Otto ()
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Anne Otto: IAB Rheinland-Pfalz-Saarland

Journal of Cultural Economics, 2018, vol. 42, issue 3, 365-391

Abstract: Abstract If being around smart people makes us smarter and more productive, what can regions do to attract smart people? This paper considers endogenous cultural amenities as a location factor for high-skilled workers. To overcome selection in the provision of cultural amenities, we exploit variation in contemporaneous cultural amenities that is explained by the path-dependence of historical agglomerations of the cultural activities. To assess spillovers from high-skilled workers attracted by cultural amenities, we use a 1% sample drawn from the population of all West German workers under social security during the period 1975–2010. This panel of individual observations allows us to compare wages of similar individuals who work in locations with different levels of high-skilled workers who are attracted by cultural amenities. To account for non-random selection of workers among cities, we use individual-location fixed effects. Our results show that cultural amenities are an important factor in the location decision of high-skilled workers. The positive effect of the local share of high-skilled workers on unskilled, skilled and high-skilled wages indicates strong and productive spillovers.

Keywords: High-skilled workers; Location factor; Productive spillovers; Cultural amenities (search for similar items in EconPapers)
JEL-codes: R23 J30 I26 H41 (search for similar items in EconPapers)
Date: 2018
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Working Paper: Music in the Air: Estimating the Social Return to Cultural Amenities (2015) Downloads
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