Citation

Discussion Paper Details

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Title: Human Capital and Externalities in Cities

Author(s): Antonio Ciccone and Giovanni Peri

Publication Date: November 2000

Keyword(s): Aggregate Return To Human Capital, Cities, Decreasing Returns To Human Capital, Human Capital Externalities, Imperfect Substitution, Perfect Substitution and Scale Externalities

Programme Area(s): International Macroeconomics, Labour Economics and Public Economics

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.

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Bibliographic Reference

Ciccone, A and Peri, G. 2000. 'Human Capital and Externalities in Cities'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2599