Market Thickness and the Early Labour Market Career of University Graduates: An Urban Advantage?

Abstract

We analyse the influence of market thickness for skills on initial wages and the early job market career 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 increase employment probabilities and yield higher rewards to human capital, even after controlling for employment selection. The premium on initial wages for graduates in urban regions is in the interval of 5-6%, and we estimate a wage-growth premium of about 2-4%. Thicker markets for skills appear as a key reason for the concentration of graduates to larger cities.Épaisseur du marché initial de l'emploi pour les diplômés universitaires -un avantage en ville?RÉSUMÉ nous analysons l'influence de l'épaisseur du marché en compétences sur les salaires de départ, et le marché initial de l'emploi pour les diplômés universitaires. En utilisant des données de panel à micro-niveau, en Suède, appliqués à une cohorte de diplômés, nous montrons que deux diplômés sur trois se rendent dans une grande ville dès qu'ils se sont diplômés. Les grandes villes augmentent les possibilités de trouver un emploi, et apportent une rentabilité supérieure pour le capital humain, même en tenant compte du processus de sélection. La rémunération de départ des diplômés en zone urbaine est supérieure de l'ordre de 5 à 6 pour cent, et nous estimons que l'augmentation des salaires est supérieure, elle aussi, de 2 à 4 pour cent. Des marchés plus épais pour les compétences semble être la principale raison de la concentration de diplômés dans les grandes villes.

Graduate migration and regional development: an international perspective

“…Empirical evidence suggests that local development is fostered by the presence of a skilled labour pool, which generates knowledge spill-overs and human capital externalities in turn increasing productivity and high-technology activities (Consoli et al, 2013). Ahlin et al (2014) find that the spatial distribution of human capital is vital in explaining the long-term dynamics of the geography of jobs, incomes and well-being. Highly educated and highly skilled people are a sought-after resource as they are an irreplaceable element for economic success.…”

Working while studying: does it lead to greater attachment to the regional labour market?

“…For example, Marinelli (2013) finds that return migrants (from study region to origin region) have a poorer academic performance and are less strongly attracted to highly innovative regions than onward migrants (see also Faggian et al, 2013). According to Ahlin et al (2014), the attraction of urban regions among university graduates in Sweden is due to their thicker labour markets for skills: large cities increase employment probabilities and yield higher returns to human capital.…”

Research on Students' Performance in Higher Education through Sequence Analysis

“…However, the general focus is on the effects of periods in and moves between certain locations on labor market outcomes (e.g. Ahlin, Andersson, & Thulin, 2014;van Ham, 2003;Venhorst et al, 2011). This approach ignores that mobility and local labor market circumstances may have different effects on labor market outcomes depending on their timing within the career start and their relation to other mobility.…”