Human Capital Spillovers in Dutch Cities: Consumption or Productivity?

Abstract: In this paper, we study the recursive relationship between the ability of Dutch cities to attract graduate human capital to their labour - or housing markets and a city’s skills structure, using a comprehensive dataset and a novel operationalisation strategy. We control for the effects of a city’s skills endowments, its (non-) economic characteristics and those of other relevant cities. We find positive effects of a relatively strong graduate labour market inflow on the share of higher and scientific-level jobs, interpreted as production spillovers. Next to this, graduate inflows to residential areas have positive effects on the share of jobs requiring lower and medium skills, which implies consumption spillovers. Conversely, large shares of higher and scientific jobs stimulate the inflow on the labour market of recent graduates. A large share of higher educated among the resident population promotes graduate residential inflows. We find little evidence for other production or consumption spillovers across the incumbent skill groups, at the level of Dutch cities.

 

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