Human capital spillovers in Dutch cities: consumption or productivity?

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. JEL Classification

Exploring Local Labor Markets and Knowledge Spillover from a Spatial Perspective

“…Previous studies confirm strong and positive connections between productivity, agglomeration, and premium earnings in urban areas (Combes et al, 2007;Díaz-Dapena et al, 2017;Glaeser & Maré, 2001;Gould, 2007;Lee et al, 2017;Moretti, 2010;Prasertsoong & Puttanapong, 2022;Tadjoeddin & Mercer-Blackman, 2018). The interplay between regional size, productivity, and wage offerings per sector in cities influences residential choices (de la Roca & Puga, 2017;Glaeser & Resseger, 2010;Gould, 2007;Lee et al, 2017;Venhorst, 2017). Li et al (2021) concluded that high wages determine the quality of the workforce, reinforcing the idea that cities are zones of productivity with substantial paychecks and progressive technology.…”

“…Combes et al (2012) remarked that agglomeration economies in larger cities encourage interchanges that enhance productivity, conceivably strengthened by localized natural benefits. In other words, urban agglomeration means that the local labor market's size can yield productivity gains (Ciccone, 2002;de la Roca & Puga, 2017;Glaeser &Resseger, 2010;Groot & de Groot, 2020;Lee et al, 2017;Prasert-soong&Puttanapong, 2022;Venhorst, 2017). The higher productivity observed in a dense labor market could be influenced by preferences that arise due to increased competition in that market (Ciccone, 2002;Di Giacinto et al, 2020;Gould, 2007;Henderson & Turner, 2020;Moretti, 2010;Shi et al, 2022;Sveikauskas, 1975;Tadjoeddin& Mercer-Blackman, 2018).…”

Local entrepreneurship ecosystems and emerging industries: Case study of Malopolskie, Poland

“…A larger graduate base within a population is positively associated with more science and higher-skilled jobs (Venhorst, 2017). However, there is a perception by some in the large business community that the universities are outdated and that they used old-fashioned methods not suitable for enabling entrepreneurial behaviour or producing graduates ready for current demands.…”

Regional Industrial Transformation and Educational System Stakeholders Networks

“…Today, the labor market is characterized by low-skilled demand. More than 80% of applicants have a non-advising qualification level, while 7% have no qualifications, and 39% have no professional education 8 . This state of affairs in the labor market is taking shape in the context of a progressive increase in the technological effectiveness and innovativeness of workplaces that require highly specialized high qualifications.…”

“…A number of papers study the overall positive effect of higher education, including economic benefits [6,7]. Several studies are more focused on identifying the relationship between human capital, which is largely a product of the regional educational system and regional development [8,9]. Some of the works are aimed at identifying disparities between supply and demand in the labor market, which arises as a result of the inconsistency of the qualifications of graduates with modern requirements [10].…”