Scandinavian Working Papers in Economics

HUI Working Papers,
HUI Research

No 97: How Does Employment Density Influence Individuals' Wages? A Micro Data Approach.

Johan Håkansson () and Gunnar Isacsson
Additional contact information
Johan Håkansson: HUI Research, Postal: HUI Research, SE-103 29 Stockholm, Sweden and Dalarna University, SE-791 88, Falun, Sweden
Gunnar Isacsson: The Swedish National Road and Transport Research Institute (VTI), Postal: 781 29 Borlänge, Sweden,

Abstract: We estimate the effect of employment density on wages in Sweden in a large geocoded data set on individuals and workplaces. Employment density is measured in four circular zones around each individual's place of living. The data contains a rich set of control variables that we use in an instrumental variables framework. Results show a relatively strong but rather local positive effect of employment density on wages. Beyond 5 kilometers the effect becomes negative. This might indicate that the effect of agglomeration economies falls faster with distance than the effects of congestion.

Keywords: agglomeration economies; accessibility; IV; Sweden

JEL-codes: J24; R10; R23; R40

34 pages, October 3, 2013

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