LIANG Wenquan;LU Ming
Shanghai Jiao Tong University;Shanghai Jiao Tong University
This paper explores the human capital externality in service industry by estimating production functions using the China Second National Economic Census data in 2008, which contains within-enterprise education composition of employees. Human capital externalities mostly exist in the large enterprises of service industry. Furthermore, we divide the source of externalities of the human capital into three parts: intra-industry, other service industries and manufacturing industry. Then we find that the externalities generated by human capital in intra-industry and other service industries increase along with the city size, but externality from the manufacturing industry decreases along with the city size. These results are robust to alternative production function forms and the measures of human capital. Finally, we investigate the mechanisms through which the human capital externalities arise. We find that the externalities from the interactions with the high-skilled labors in intra-industry and other service industries increase along with the city size, but the externalities from the interactions with the high-skilled labors in manufacturing industry decrease with city size. Our findings imply that large cities become increasingly important during the post-industrialization era.
human capital externality;service industry;city size
To explore the background and basis of the node document