Scandinavian Working Papers in Economics

Papers in Innovation Studies,
Lund University, CIRCLE - Centre for Innovation Research

No 2013/2: Market Thickness and the Early Labor Market Career of University Graduates- An urban advantage?

Lina Ahlin (), Martin Andersson () and Per Thulin ()
Additional contact information
Lina Ahlin: CIRCLE, Lund University, Postal: CIRCLE, Lund University, PO Box 117, SE-22100 Lund, Sweden
Martin Andersson: CIRCLE, Lund University, Postal: CIRCLE, Lund University, PO Box 117, SE-22100 Lund, Sweden
Per Thulin: Royal Institute of Technology and Swedish Entrepreneurship Forum

Abstract: We analyze the influence of market thickness for skills on initial wages and subsequent wage development of university graduates. Using Swedish micro-level panel data on a cohort of graduates, we show that two out of three graduates move to large cities upon graduation. Large cities yield higher rewards to human capital and a stronger early job market career. The premium on initial wages for urban graduates is in the interval of 6-12 percent, and we estimate a wage-growth premium of about 3 percent. Thicker markets for skills appear as a key reason for the concentration of university graduates to larger cities.

Keywords: human capital; university graduates; urban wage premium; market thickness; matching; agglomeration economies; migration; job switching

JEL-codes: J31; J61; R10; R12

32 pages, February 14, 2013

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201302_Ahlin_et_al.pdf PDF-file

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