Quantifying the effect of labor market size on learning externalities

Jan Cornelius Peters

No 2017-06, Economics Working Papers from Christian-Albrechts-University of Kiel, Department of Economics

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.

Keywords: Agglomeration economies; Human capital externalities; Learning; Regional disparities; Urban wage growth premium; Transition to employment (search for similar items in EconPapers)
JEL-codes: J31 R10 R23 (search for similar items in EconPapers)
Date: 2017, Revised 2017
New Economics Papers: this item is included in nep-eur, nep-geo, nep-lma and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Quantifying the effect of labor market size on learning externalities (2017)
Working Paper: Quantifying the effect of labor market size on learning externalities (2017)
Working Paper: Quantifying the effect of labor market size on learning externalities (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cauewp:201706

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