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Workers' Education, Spillovers, and Productivity: Evidence from Plant-Level Production Functions

Enrico Moretti
The American Economic Review
Vol. 94, No. 3 (Jun., 2004), pp. 656-690
Stable URL: http://www.jstor.org/stable/3592947
Page Count: 35
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Workers' Education, Spillovers, and Productivity: Evidence from Plant-Level Production Functions
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Abstract

I assess the magnitude of human capital spillovers by estimating production functions using a unique firm-worker matched data set. Productivity of plants in cities that experience large increases in the share of college graduates rises more than the productivity of similar plants in cities that experience small increases in the share of college graduates. These productivity gains are offset by increased labor costs. Using three alternative measures of economic distance-input-output flows, technological specialization, and patent citations-I find that within a city, spillovers between industries that are economically close are larger than spillovers between industries that are economically distant.

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