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Skill-Biased Agglomeration Effects and Amenities: Theory with an Application to Italian Cities

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  • Alberto Dalmazzo
  • Guido De Blasio

Abstract

We provide a spatial equilibrium model with skill heterogeneity and then bring the model to data on workers living in Italian cities. Theoretically, we postulate that agglomeration to affect both production and consumption. Moreover, we allow the evaluation of urban amenities to vary across skill-groups. Empirically, we find evidence of a substantial urban rent premium, while we fail to find support for the urban wage premium. These results apply more dramatically to higheducated individuals, who care about the consumption effects of agglomeration disproportionately more than their lesseducated counterparts. We show that urban skilled workers benefit from jobs of higher quality (better working environment; higher consideration received by others) and valuate amenities more (local public goods, such as transportation, health and schooling services; shopping possibilities, and the cultural consumption potentials made possible by the location of cinemas, theaters, and museums).

Suggested Citation

  • Alberto Dalmazzo & Guido De Blasio, 2007. "Skill-Biased Agglomeration Effects and Amenities: Theory with an Application to Italian Cities," Department of Economics University of Siena 503, Department of Economics, University of Siena.
    • Handle: RePEc:usi:wpaper:503
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    Cited by:

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    2. Thiess Buettner & Alexander Ebertz, 2009. "Quality of life in the regions: results for German Counties," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 43(1), pages 89-112, March.
    3. Alberto Dalmazzo & Antonio Accetturo & Guido de Blasio, 2011. "Skill-Biased Share-Altering Technical Change in Spatial General Equilibrium," ERSA conference papers ersa11p83, European Regional Science Association.
    4. Elisabetta Marinelli, 2013. "Sub-national Graduate Mobility and Knowledge Flows: An Exploratory Analysis of Onward- and Return-Migrants in Italy," Regional Studies, Taylor & Francis Journals, vol. 47(10), pages 1618-1633, November.
    5. Antonio Accetturo & Alberto Dalmazzo & Guido Blasio, 2014. "Skill Polarization In Local Labor Markets Under Share-Altering Technical Change," Journal of Regional Science, Wiley Blackwell, vol. 54(2), pages 249-272, March.
    6. Adalgiso Amendola & Cristian Barra & Roberto Zotti, 2020. "Does graduate human capital production increase local economic development? An instrumental variable approach," Journal of Regional Science, Wiley Blackwell, vol. 60(5), pages 959-994, November.
    7. Elisabetta Marinelli, 2011. "Graduate migration in Italy - Lifestyle or necessity?," ERSA conference papers ersa11p1608, European Regional Science Association.

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    Keywords

    agglomeration; cities.;

    JEL classification:

    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General

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