IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/69829.html
   My bibliography  Save this paper

Historical trades, skills and agglomeration economies

Author

Listed:
  • Ehrl, Philipp
  • Monteiro Monasterio, Leonardo

Abstract

We exploit differences in the spatial distribution of industrial and liberal occupations in the years 1872 and 1920 to instrument for today's concentration of interpersonal and analytical skills in Brazil. The data suggest that the local supply of knowledge and manufacturing provided by these historical trades favored a growth path that has shaped the occupational structure until the present day, whereby the existence of a large local consumer market was a necessary condition for this development. By means of these instruments, we present causal evidence that the regional concentration of interpersonal and analytical skills generates positive wage externalities. Particularly university graduates and workers without formal education benefit most from these agglomeration economies.

Suggested Citation

  • Ehrl, Philipp & Monteiro Monasterio, Leonardo, 2016. "Historical trades, skills and agglomeration economies," MPRA Paper 69829, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:69829
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/69829/1/MPRA_paper_69829.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Combes, Pierre-Philippe & Gobillon, Laurent, 2015. "The Empirics of Agglomeration Economies," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 247-348, Elsevier.
    2. Keith Finlay & Leandro Magnusson & Mark E Schaffer, 2013. "WEAKIV: Stata module to perform weak-instrument-robust tests and confidence intervals for instrumental-variable (IV) estimation of linear, probit and tobit models," Statistical Software Components S457684, Boston College Department of Economics, revised 18 Oct 2016.
    3. Guy Michaels & Ferdinand Rauch & Stephen J Redding, 2019. "Task Specialization in U.S. Cities from 1880 to 2000," Journal of the European Economic Association, European Economic Association, vol. 17(3), pages 754-798.
    4. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, December.
    5. Jan Eeckhout & Roberto Pinheiro & Kurt Schmidheiny, 2014. "Spatial Sorting," Journal of Political Economy, University of Chicago Press, vol. 122(3), pages 554-620.
    6. Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon & Sébastien Roux, 2010. "Estimating Agglomeration Economies with History, Geology, and Worker Effects," NBER Chapters, in: Agglomeration Economics, pages 15-66, National Bureau of Economic Research, Inc.
    7. Glaeser, Edward L., 1999. "Learning in Cities," Journal of Urban Economics, Elsevier, vol. 46(2), pages 254-277, September.
    8. Philipp Ehrl, 2018. "Task trade and employment patterns: The offshoring and onshoring of Brazilian firms," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 27(3), pages 235-266, April.
    9. Gilles Duranton & Diego Puga, 2001. "Nursery Cities: Urban Diversity, Process Innovation, and the Life Cycle of Products," American Economic Review, American Economic Association, vol. 91(5), pages 1454-1477, December.
    10. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2007. "Enhanced routines for instrumental variables/GMM estimation and testing," CERT Discussion Papers 0706, Centre for Economic Reform and Transformation, Heriot Watt University.
    11. Glaeser, Edward L & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1992. "Growth in Cities," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1126-1152, December.
      • Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc.
      • Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992. "Growth in Cities," Scholarly Articles 3451309, Harvard University Department of Economics.
    12. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
    13. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2007. "Enhanced routines for instrumental variables/generalized method of moments estimation and testing," Stata Journal, StataCorp LP, vol. 7(4), pages 465-506, December.
    14. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 49, pages 2119-2171, Elsevier.
    15. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    16. Wagner, Alfred, 1891. "Marshall's Principles of Economics," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 5, pages 319-338.
    17. Marigee Bacolod & Bernardo S. Blum & William C. Strange, 2009. "Urban interactions: soft skills versus specialization," Journal of Economic Geography, Oxford University Press, vol. 9(2), pages 227-262, March.
    18. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March.
    19. Alexandra Spitz-Oener, 2006. "Technical Change, Job Tasks, and Rising Educational Demands: Looking outside the Wage Structure," Journal of Labor Economics, University of Chicago Press, vol. 24(2), pages 235-270, April.
    20. Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2008. "Spatial wage disparities: Sorting matters!," Journal of Urban Economics, Elsevier, vol. 63(2), pages 723-742, March.
    21. Duranton, Gilles & Puga, Diego, 2004. "Micro-foundations of urban agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 48, pages 2063-2117, Elsevier.
    22. Richard Florida & Charlotta Mellander & Kevin Stolarick & Adrienne Ross, 2012. "Cities, skills and wages," Journal of Economic Geography, Oxford University Press, vol. 12(2), pages 355-377, March.
    23. K. J. Arrow, 1971. "The Economic Implications of Learning by Doing," Palgrave Macmillan Books, in: F. H. Hahn (ed.), Readings in the Theory of Growth, chapter 11, pages 131-149, Palgrave Macmillan.
    24. Glaeser, Edward L & Mare, David C, 2001. "Cities and Skills," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 316-342, April.
    25. Chaudhary, Latika & Musacchio, Aldo & Nafziger, Steven & Yan, Se, 2012. "Big BRICs, weak foundations: The beginning of public elementary education in Brazil, Russia, India, and China," Explorations in Economic History, Elsevier, vol. 49(2), pages 221-240.
    26. Yvonne Stolz & Joerg Baten & Tarcísio Botelho, 2013. "Growth effects of nineteenth-century mass migrations: 'Fome Zero' for Brazil?," European Review of Economic History, European Historical Economics Society, vol. 17(1), pages 95-121, February.
    27. Acemoglu, Daron & Autor, David, 2011. "Skills, Tasks and Technologies: Implications for Employment and Earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 12, pages 1043-1171, Elsevier.
    28. Andrews,Donald W. K. & Stock,James H. (ed.), 2005. "Identification and Inference for Econometric Models," Cambridge Books, Cambridge University Press, number 9780521844413, November.
    29. Henderson, Vernon & Kuncoro, Ari & Turner, Matt, 1995. "Industrial Development in Cities," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 1067-1090, October.
    30. Andersson, Martin & Klaesson , Johan & Larsson , Johan P, 2014. "The Sources of the Urban Wage Premium by Worker Skills," Papers in Innovation Studies 2014/6, Lund University, CIRCLE - Centre for Innovation Research.
    31. Firpo, Sergio & Fortin, Nicole M. & Lemieux, Thomas, 2011. "Occupational Tasks and Changes in the Wage Structure," IZA Discussion Papers 5542, Institute of Labor Economics (IZA).
    32. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
    33. Gilles Duranton & J. V. Henderson & William C. Strange (ed.), 2015. "Handbook of Regional and Urban Economics," Handbook of Regional and Urban Economics, Elsevier, edition 1, volume 5, number 5.
    34. Naritomi, Joana & Soares, Rodrigo R. & Assunção, Juliano J., 2012. "Institutional Development and Colonial Heritage within Brazil," The Journal of Economic History, Cambridge University Press, vol. 72(2), pages 393-422, May.
    35. Philipp Ehrl, 2014. "A breakdown of residual wage inequality in Germany," Working Papers 150, Bavarian Graduate Program in Economics (BGPE).
    36. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2008. "Trends in U.S. Wage Inequality: Revising the Revisionists," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 300-323, May.
    37. Rosenthal, Stuart S. & Strange, William C., 2008. "The attenuation of human capital spillovers," Journal of Urban Economics, Elsevier, vol. 64(2), pages 373-389, September.
    38. Leonardo Monasterio & Eustáquio Reis, 2008. "Mudanças na Concentração Espacial das Ocupações nas Atividades Manufatureiras no Brasil – 1872-1920," Discussion Papers 1361, Instituto de Pesquisa Econômica Aplicada - IPEA.
    39. Martin Andersson & Johan Klaesson & Johan P Larsson, 2014. "The sources of the urban wage premium by worker skills: Spatial sorting or agglomeration economies?," Papers in Regional Science, Wiley Blackwell, vol. 93(4), pages 727-747, November.
    40. Eustáquio Reis, 2014. "Spatial income inequality in Brazil, 1872–2000," Economia, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics], vol. 15(2), pages 119-140.
    41. Bacolod, Marigee & Blum, Bernardo S. & Strange, William C., 2009. "Skills in the city," Journal of Urban Economics, Elsevier, vol. 65(2), pages 136-153, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Stuart Donovan & Thomas de Graaff & Henri L. F. de Groot & Carl C. Koopmans, 2024. "Unraveling urban advantages—A meta‐analysis of agglomeration economies," Journal of Economic Surveys, Wiley Blackwell, vol. 38(1), pages 168-200, February.
    2. Koster, Hans R.A. & Ozgen, Ceren, 2021. "Cities and tasks," Journal of Urban Economics, Elsevier, vol. 126(C).
    3. Edivaldo C. Neves Jr & Carlos R. Azzoni, Andre Chagas, 2017. "Skill wage premium and city size," Working Papers, Department of Economics 2017_19, University of São Paulo (FEA-USP).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Combes, Pierre-Philippe & Gobillon, Laurent, 2015. "The Empirics of Agglomeration Economies," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 247-348, Elsevier.
    2. Philipp Ehrl & Leonardo Monasterio, 2021. "Spatial skill concentration agglomeration economies," Journal of Regional Science, Wiley Blackwell, vol. 61(1), pages 140-161, January.
    3. Niebuhr, Annekatrin, 2016. "Benefits of dense labour markets - Evidence from transitions to employment in Germany," VfS Annual Conference 2016 (Augsburg): Demographic Change 145715, Verein für Socialpolitik / German Economic Association.
    4. Stef Proost & Jacques-François Thisse, 2019. "What Can Be Learned from Spatial Economics?," Journal of Economic Literature, American Economic Association, vol. 57(3), pages 575-643, September.
    5. Suzanne Kok & Bas ter Weel, 2014. "Cities, Tasks, And Skills," Journal of Regional Science, Wiley Blackwell, vol. 54(5), pages 856-892, November.
    6. Duranton, Gilles & Puga, Diego, 2014. "The Growth of Cities," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 5, pages 781-853, Elsevier.
    7. Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon, 2011. "The identification of agglomeration economies," Journal of Economic Geography, Oxford University Press, vol. 11(2), pages 253-266, March.
    8. Paul Verstraten & Gerard Verweij & Peter Zwaneveld, 2018. "Why do wages grow faster in urban areas? Sorting of high potentials matters," CPB Discussion Paper 377.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    9. Jorge De La Roca & Diego Puga, 2017. "Learning by Working in Big Cities," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(1), pages 106-142.
    10. Alessia Matano & Moisés Obaco & Vicente Royuela, 2020. "What drives the spatial wage premium in formal and informal labor markets? The case of Ecuador," Journal of Regional Science, Wiley Blackwell, vol. 60(4), pages 823-847, September.
    11. De la Roca, Jorge, 2017. "Selection in initial and return migration: Evidence from moves across Spanish cities," Journal of Urban Economics, Elsevier, vol. 100(C), pages 33-53.
    12. Paul Verstraten & Gerard Verweij & Peter Zwaneveld, 2018. "Why do wages grow faster in urban areas? Sorting of high potentials matters," CPB Discussion Paper 377, CPB Netherlands Bureau for Economic Policy Analysis.
    13. Andrew Perumal, 2017. "42 Years of Urban Growth and Industry Composition," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 45(2), pages 133-147, June.
    14. Alessia Matano & Moisés Obaco & Vicente Royuela, 2018. "“What drives the spatial wage premium for formal and informal workers? The case of Ecuador”," AQR Working Papers 201806, University of Barcelona, Regional Quantitative Analysis Group, revised Jun 2018.
    15. Suzanne Kok & Bas ter Weel, 2014. "Cities, Tasks and Skills," CPB Discussion Paper 269, CPB Netherlands Bureau for Economic Policy Analysis.
    16. Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent & Roux, Sébastien, 2012. "Sorting and local wage and skill distributions in France," Regional Science and Urban Economics, Elsevier, vol. 42(6), pages 913-930.
    17. Faberman, R. Jason & Freedman, Matthew, 2016. "The urban density premium across establishments," Journal of Urban Economics, Elsevier, vol. 93(C), pages 71-84.
    18. Koster, Hans R.A. & Ozgen, Ceren, 2021. "Cities and tasks," Journal of Urban Economics, Elsevier, vol. 126(C).
    19. Edivaldo C. Neves Jr & Carlos R. Azzoni, Andre Chagas, 2017. "Skill wage premium and city size," Working Papers, Department of Economics 2017_19, University of São Paulo (FEA-USP).
    20. Behrens, Kristian & Robert-Nicoud, Frédéric, 2015. "Agglomeration Theory with Heterogeneous Agents," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 171-245, Elsevier.

    More about this item

    Keywords

    agglomeration economies; skills; long-run industrial development; Brazil;
    All these keywords.

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • N16 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Latin America; Caribbean
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:69829. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.