Abstract
We study the recursive relationship between the ability of Dutch cities to attract recent graduate human capital to their labour—or housing markets and a city’s skills structure, using a comprehensive dataset and a novel operationalisation strategy. We disentangle production and consumption spillovers by separating out human capital employed in a city’s labour market and human capital present in a city’s resident population, respectively. We do so for both the recent graduates flowing into Dutch cities to find work and a residential location, as well as for the incumbent workers and population. We control for the effects of a city’s skills endowments, its (non-) economic characteristics and those of other relevant cities. We find positive effects of a relatively strong graduate labour market inflow on the share of higher and scientific-level jobs. Production spillovers therefore predominantly occur among the higher skilled. Contrary to the higher educated incumbent population, which appears to prefer high skilled services, recent graduate inflows to residential areas have positive effects on the share of jobs requiring lower and medium skills. Consumption spillovers from graduate residential inflows thus occur between higher and lower skilled.
Highlights
The presence of human capital in regions and cities is widely regarded as conducive to development and economic growth
In this paper we have studied the recursive relationship between a city’s skills structure and the inflow of graduate human capital onto its labour and housing markets
Should policy makers be focussing on attracting graduate human capital to their labour markets or to their residential areas? Not much is known on how these inflows impact on the city’s skills structure: are there only effects for the higher skilled, or do other groups stand to gain as well? And if so, can we ascribe these effects to either labour market based production spillovers, or to consumption spillovers stemming from the residential inflows? is the effect of graduate human capital inflows significant over and above the effects of existing city endowments of human capital, and the effects of neighbouring areas?
Summary
The presence of human capital in regions and cities is widely regarded as conducive to development and economic growth. Cooperating and sharing the city market place with such highly skilled individuals has beneficial effects for other skills groups These benefits may materialise through production and consumption spillovers. An important feature of this study is our differentiation between the exact location of jobs by qualification level and the location of the resident population by education level We argue that such a distinction is instrumental in disentangling consumption and productivity effects of both existing stocks of resident and working individuals as well as recent graduates. Little is known about how a city’s skill structure is related to the characteristics of other nearby cities, or those with which a commuting tie exists This is important when studying employment and population interactions on.
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