Abstract
Since workplace skills present diverse dimensions of a worker’s ability, it has recently received renewed interest by researchers examining the growth of cities. The purpose of the paper explores the advantage of regional concentrations of workers specialized in different types of skills. Specifically, the analysis estimates the agglomeration effects of skill-based labor pooling on wage levels and wage growth in South Korea. To this end, it constructs skill-based labor pool indices for cognitive, social, technical, and physical skills at a provincial level. The indices show an uneven geographical distribution in varying degrees across four types of skills. The regression results indicate that the urban wage premium of skill-based local labor pooling varies according to types of skills. The greatest magnitude of benefit is incurred by workers in cognitive-skill-oriented occupations and moderate benefits are found in technical- and physical-skill-oriented occupations. An urban wage premium is non-existent in social-skill-oriented occupations. In addition, the wage growth model with job mobility shows that the urban wage premium immediately affects workers who change jobs and relocate to denser areas. As high-wage occupations earn higher wage premiums when workers in these occupations are concentrated, it supports patterns of the polarization of both skills and their effects.
Highlights
Studies related to workers’ skills have highlighted their importance in fostering insight into the growth of cities and the divergence of regional economies [1,2]
The analytical model for estimating the urban wage premium is expressed in ln(Wkit) = βXkit + δList + φk + εkt where the dependent variable is the log of the monthly wage of individual k in province i at time t, Xkit denotes the characteristics of individual k in province i at time t, including age, gender, education attainment, and List is the skill-based local labor pool index for skill s in province i at time t. φk represents unobserved individual characteristics such as innate intelligence and ability
The paper explored the agglomeration effect of skill-based labor pooling on wage levels and growth in the case of South Korean regional economies
Summary
Studies related to workers’ skills have highlighted their importance in fostering insight into the growth of cities and the divergence of regional economies [1,2]. It focuses on regional concentrations of workers with particular skill types To this end, it presents an index of skill-based local labor pooling. By categorizing occupations based on their common characteristics of skillsets, this study constructs a skill-based labor pool index This analysis takes into account four distinctive types of skills: cognitive, social, technical, and physical. An examination of variations in cognitive-, social-, technical-, and physical-skill-based local labor pooling would provide valuable insights into our understanding of agglomerations and the future growth of cities. The empirical model seeks to determine differences in the urban wage premium among four skill groups It assumes that some occupations with some distinctive skills may gain greater benefits from local labor pooling than others.
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