Scandinavian Working Papers in Economics

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

No 2016/10: Human Capital Sorting - the ‘when’ and ‘who’ of sorting of talents to urban regions

Lina Ahlin (), Martin Andersson () and Per Thulin ()
Additional contact information
Lina Ahlin: CIRCLE & Department of Economics, Lund University
Martin Andersson: Department of Industrial Economics, Blekinge Institute of Technology (BTH), Karlskrona & CIRCLE, Lund University
Per Thulin: Department of Industrial Economics and Management, KTH Royal Institute of Technology, Stockholm & Swedish Entrepreneurship Forum, Stockholm

Abstract: Sorting of high-ability workers is a main source of urban-rural disparities in economic outcomes. Less is known about when such human capital sorting occurs and who it involves. Using data on 15 cohorts of university graduates in Sweden, we demonstrate significant sorting to urban regions on high school grades and education levels of parents, i.e. two attributes typically associated with latent abilities that are valued in the labor market. A large part of this sorting occurs already in the decision of where to study, because top universities are predominantly located in urban regions. Estimates from a selection model show that even after controlling for sorting prior to labor market entry, the ‘best and brightest’ are still more likely to start working in urban regions, and are also more likely to remain there over long time periods. We conclude that a) urban regions are true magnets for high-ability graduates, and that b) studies of human capital sorting need to account for selection processes to and from universities, because neglecting mobility prior to labor market entry is likely to lead to underestimation of the extent of sorting to urban regions.

Keywords: human capital; university graduates; spatial sorting; migration; labor mobility; ability; geography of talent; spatial selection

JEL-codes: I23; J24; J61; R12

31 pages, March 17, 2016

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201610_Ahlin_et_al.pdf PDF-file 

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