Agglomeration of Knowledge

This paper examines the agglomeration of people working in jobs with similar knowledge requirements, ranging from groups of artists and scientists to service providers and low-skilled labourers. Empirical results from the US suggest that agglomeration enhances earnings in innovation- and creative-based occupations such as artists, engineers, financial executives and information technology workers. In contrast, medical workers, personal service providers and low-skilled labourers do not appear to benefit from agglomeration. Positive agglomeration effects, however, need not lead to a high geographical concentration of economic activity. Rather, an occupation’s ability to concentrate in a few places also depends on the way in which knowledge is disseminated to people outside the occupational cluster.