Cities in the post-industrial economy: how city size affects human capital externality in service industry?

【Author】

LIANG Wenquan;LU Ming

【Institution】

Shanghai Jiao Tong University;Shanghai Jiao Tong University

【Abstract】

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.

【Keywords】

human capital externality;service industry;city size

References

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Springer Journals Database

Total: 25 articles

  • [1] GARY H.JEFFERSON(Brandeis University)THOMAS G.RAWSKI(University of Pittsburgh)YIFAN ZHANG(Lingnan University), Productivity Growth and Convergence across China’s Industrial Economy, China Economic Quarterly,
  • [2] Jiang Xiaojuan (Research Department of the State Council), Growth of Service Industries:True Meaning,Multiple Influences and Trend, Economic Research Journal,
  • [3] Zhiqiang Liu, The external returns to education: Evidence from Chinese cities, Journal of Urban Economics,
  • [4] Stuart S. Rosenthal;;William C. Strange, The attenuation of human capital spillovers, Journal of Urban Economics,

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