Event Recap: Human Capital Spillovers in Dutch Cities: Consumption or Productivity?

Oct. 30, 2012

On Monday, October 29, 2012, Viktor Venhorst, Post-Doctoral Researcher in the Faculty of Spatial Sciences at the University of Groningen, presented his recent research focused on “Human capital spillovers in Dutch cities: consumption or productivity?” as part of the 2012 AEDE Seminar Series.

Venhorst, who focused on the study of graduate mobility while completing his Ph.D. and was at Ohio State to visit with AEDE regional economists Alessandra Faggian and Mark Partridge, presented research that he completed while studying at the University of Groningen focused on the relationship between skills structure and the inflow of graduate human capital in Dutch cities.
As Venhorst noted during his presentation, Dutch policymakers have spent great time and energy on attracting individuals with high human capital to cities under the assumption that this will raise overall well-being in the city. However, not much research exists on the impact that this inflow has on the city’s skill structures. As Venhorst noted, there are many questions that remain concerning the attraction of highly skilled graduates to cities, which he attempts to answer in his research: “Are there only effects for the higher skilled, or do other groups stand to gain as well? Is the effect of graduate human capital inflows significant over and above the effects of existing city endowments of human capital? Should policymakers be focusing on attracting graduate human capital to their labour markets or to their residential areas?”
In conducting his data analysis using a dataset that contained information on graduate mobility to 285 Dutch municipalities over the period of 1998 to 2008, Venhorst measured the inflow of recent graduates into a city’s labor market relative to the inflow into the city’s housing market. To do this, he separated the graduates he studied into several categories. He explained, “In order to address both production and consumption spillovers, graduate human capital inflow is operationalised in terms of labour market inflow relative to housing market inflow. Our dataset allows us to distinguish between graduates starting a career within a city’s labour market and graduates moving into the city’s residential areas. Further, an important feature of this study is our differentiation between the exact location of jobs and the location of the resident population. This will be instrumental in disentangling consumption and productivity effects of existing stocks of resident and working individuals with high human capital in cities.”
In his research, Venhorst found positive effects of a relatively strong graduate labor market inflow into a city on the share of higher and scientific-level jobs, which he interprets as production spillovers. He also found that graduate inflows to residential areas have positive effects on the share of jobs requiring lower and medium skills, which he interprets as consumption spillovers. In addition, he found that conversely, large shares of higher and scientific jobs in a city stimulate the inflow on the labor market of recent graduates. A large share of higher educated among the resident population promotes graduate residential inflows. He found little evidence for other production or consumption spillovers across the incumbent skill groups.
As Venhorst noted in his research, policymakers can learn a lot from the results of his study, “Our analysis demonstrates that there is plenty of scope to focus upon attracting human capital flows to both a city’s labour as well as its housing markets, with different types of inflow expected to impact on different groups in the city. However, many of the factors that were demonstrated to be of relevance in this study are difficult for policymakers in individual cities to influence, especially in the short term. Given some of the key mechanisms in play, policymakers should focus on establishing the role of their city in the wider region and the national urban hierarchy.”
October 31, 2012