Agglomeration and job matching among college graduates

Abstract: We examine job matching as a potential source of urban agglomeration economies. Focusing on college graduates, we construct two direct measures of job matching based on how well an individual?s job corresponds to his or her college education. Consistent with matching-based theories of urban agglomeration, we find evidence that larger and thicker local labor markets increase both the likelihood and quality of a job match for college graduates. We then assess the extent to which better job matching of college-educated workers increases individual-level wages and thereby contributes to the urban wage premium. We find that college graduates with better job matches do indeed earn higher wages on average, though the contribution of such job matching to aggregate urban productivity appears to be relatively modest.

Keywords: labor market matching; urban wage premium; agglomeration; underemployment; productivity;

JEL Classification: J24; R23; J31; I21;

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Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Staff Reports

Publication Date: 2014-12-01

Number: 587

Pages: 37 pages

Note: For a published version of this report, see Jaison R. Abel and Richard Deitz, "Agglomeration and Job Matching among College Graduates," Regional Science and Urban Economics 51 (March 2015): 14-24. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms, may not be reflected in this document. Changes may have been made to this work since it was submitted for publication.