DP4048 Communication Externalities in Cities

Author(s):	Sylvie Charlot, Gilles Duranton
Publication Date:	September 2003
Keyword(s):	cities, communication externalities, human capital, R19 R29
JEL(s):	J31
Programme Areas:	International Trade and Regional Economics
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=4048

To identify communication externalities in French cities, we exploit a unique survey recording workplace communication of individual workers. Our hypothesis is that in larger and/or more educated cities, workers should communicate more. In turn, more communication should have a positive effect on individual wages. By estimating both an earnings and a communication equation, we find evidence of communication externalities. Being in a larger and more educated city makes workers communicate more and in turn this has a positive effects on wages. Only a small fraction of the overall effects of a more educated and larger city on wages percolates through this channel, however.