Working Paper: NBER ID: w9641
Authors: Enrico Moretti
Abstract: What is the effect of an increase in the overall level of human capital on the economy of a city? Although much is known about the private return to education, much less is known about the more important question of what happens to productivity, wages and land prices when the aggregate stock of human capital in a city increases. Increases in the aggregate stock of human capital can benefit society in ways that are not fully reflected in the private return of education. Human capital spillovers can in theory increase aggregate productivity over and above the direct effect of human capital on individual productivity. Furthermore, increases in education can reduce criminal participation and improve voters' political behavior. In this paper, I review what we know about social returns to education, with a particular emphasis on those externalities that accrue to local geographic areas. The focus of the paper is on the empirical issues that arise in identifying these externalities and on the existing empirical evidence on their magnitude. This paper was prepared as a chapter for the forthcoming Handbook of Urban and Regional Economics.
Keywords: No keywords provided
JEL Codes: J01; R0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| aggregate stock of human capital in a city (J24) | higher productivity (O49) |
| aggregate stock of human capital in a city (J24) | higher wages (J39) |
| aggregate stock of human capital in a city (J24) | elevated land prices (R31) |
| human capital spillovers (J24) | productivity increases (O49) |
| higher productivity (O49) | higher wages (J39) |
| higher productivity (O49) | elevated land prices (R31) |