Human Capital and Externalities in Cities

Antonio Ciccone and Giovanni Peri

No 2599, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We combine growth theory with US Census data on individual schooling and wages to estimate the aggregate return to human capital and human capital externalities in cities. Our estimates imply that a one year increase in average schooling in cities increases their aggregate labour productivity by 8 to 11%. We find no evidence for aggregate human capital externalities in cities however, although we use three different approaches. Our main theoretical contribution is to show how human capital externalities can be identified (non-parametrically) even if workers with different levels of human capital are imperfect substitutes in production.

Keywords: Aggregate return to human capital; Human capital externalities; Decreasing returns to human capital; Imperfect substitution; Perfect substitution; Scale externalities; Cities (search for similar items in EconPapers)
JEL-codes: J30 O0 O40 R0 (search for similar items in EconPapers)
Date: 2000-11
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Citations: View citations in EconPapers (15)

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Related works:
Working Paper: Human capital and externalities in cities (2000)
Working Paper: Human Capital and Externalities in Cities
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