Learning by working in big cities

By J. Roca, Diego Puga. 2017

606 citations recorded by the source corpus.

Individual earnings are higher in bigger cities. We consider three reasons: spatial sorting of initially more productive workers, static advantages associated with workers' current location, and learning by working in big cities. Using rich administrative data for Spain, we find that workers in bigger cities do not have higher unobserved initial ability, as reflected in individual fixed-effects. Instead, they obtain an immediate static premium while working in bigger cities and also accumulate more valuable experience, which increases their earnings faster. The additional value of experience accumulated in bigger cities persists even after workers move away and is even stronger for those with higher unobserved initial ability. This combination of effects explains both the higher mean and the greater dispersion of earnings in bigger cities.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/adfc569a7fea341042f6c91d2ab9e233d1c59907

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In Economics and Econometrics

1. A. Rodríguez‐Pose
2. M. Storper
3. S. Iammarino
4. Forhad Shilpi
5. J. Thisse
6. Stef Proost
7. H. Selod
8. R. Crescenzi

Citations in the corpus

• Regional inequality in Europe: evidence, theory and policy implications (2019, positive): “While more formal skills are required than ever before for many jobs in the new economy, more experience-based skills are also needed and can only be acquired by ‘being there’ (De la Roca and Puga, 2017).”
• What Can Be Learned from Spatial Economics? (2019, positive): “Recently, De la Roca and Puga (2017) also highlight the existence of significant gains stemming from individuals’ accumulation of experience when they work in large cities, which they bring with them when they move to smaller cities.”
• Optimal Spatial Policies, Geography, and Sorting* (2018, neutral): “The standard assumptions in Rosen (1979)-Roback (1982) models is that products are perfect substitutes, which implies Q (Q1i, .”
• Rural-Urban Migration in Developing Countries: Lessons from the Literature (2021, background): “…accept low incomes upon arrival in the city but expect greater incomes in the future as they become assimilated or as they accumulate city-specific specific human capital and become more productive over time— see evidence on Spain presented by De la Roca, 2017, and De la Roca and Puga, 2017).”
• Separate Worlds? Explaining the current wave of regional economic polarization (2018, background): “De la Roca and Puga (2017) argue that the skilled migrate to certain agglomerations not merely because of present wages, but due to the accumulation of dynamic experience effects, supporting an earlier notion of cities as learning environments, with their dynamic labor markets of matching and…”
• History, Path Dependence and Development: Evidence from Colonial Railroads, Settlers and Cities in Kenya (2017, neutral): “We test four different explanations for path dependence based on institutional persistence, technological change, sunk investments, and spatial coordination failures.”