Jaison R. Abel

Productivity and the Density of Human Capital

We estimate a model of urban productivity in which the agglomeration effect of density is enhanced by a metropolitan area’s stock of human capital. Estimation accounts for potential biases due to the endogeneity of density and industrial composition effects. Using new information on output per worker for U.S. metropolitan areas along with a measure of density that accounts for the spatial distribution of population, we find that a doubling of density increases productivity by 2 to 4 percent. Consistent with theories of learning and knowledge spillovers in cities, we demonstrate that the elasticity of average labor productivity with respect to density increases with human capital. Metropolitan areas with a human capital stock one standard deviation below the mean realize no productivity gain, while doubling density in metropolitan areas with a human capital stock one standard deviation above the mean yields productivity benefits that are about twice the average.

Do colleges and universities increase their region's human capital?

We investigate whether the degree production and R&D activities of colleges and universities are related to the amount and types of human capital in the metropolitan areas where they are located. Our results indicate only a small positive relationship exists between a metropolitan area’s production and stock of human capital, suggesting that migration plays an important role in the geographic distribution of human capital. We also find that academic R&D activities increase local human capital levels, suggesting that spillovers from such activities can raise the demand for human capital. Consistent with these results, we show that metropolitan areas with more higher education activity tend to have a larger share of workers in high human capital occupations. Thus, this research indicates that colleges and universities can raise local human capital levels by increasing both the supply of and demand for skill.

Entry into Regulated Monopoly Markets: The Development of a Competitive Fringe in the Local Telephone Industry*

Incumbent firms operating in today’s local telephone industry are beginning to face competition from new entrants. Using the dominant‐firm/competitive‐fringe framework and a recently constructed panel data set of local telephone markets, this paper provides an empirical analysis of the competitive transition underway in the U.S. local telephone industry. Of particular interest is the differential impact of economic regulation on the development of fringe competition in flocal telephone markets. Empirical results reveal that local telephone markets with price cap regulation have witnessed less net fringe entry and subsequently contain smaller competitive fringes during the time period studied. These findings imply that the widespread adoption of price cap regulation by state public utility commissions has contributed to the slow development of local telephone competition. To reconcile this surprising conclusion, a political economy explanation that details how state regulators have benefited from this regulatory decision is put forth and supported with empirical evidence.

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.

Knowledge in Cities

This study identifies clusters of US and Canadian metropolitan areas with similar knowledge traits. These groups—ranging from ‘Making regions’, characterised by knowledge about manufacturing, to ‘Thinking regions’, noted for knowledge about the arts, humanities, IT and commerce—can be used by analysts and policy-makers for the purposes of regional benchmarking or comparing the types of programme and infrastructure available to support closely related economic activities. In addition, these knowledge-based clusters help to explain the types of region that have levels of economic development that exceed, or fall short of, other places with similar amounts of college attainment. Regression results show that ‘Engineering’, ‘Building’, ‘Enterprising’ and ‘Making’ regions are associated with higher levels of productivity and/or income per capita; while ‘Teaching’, ‘Understanding’, ‘Working’ and ‘Comforting’ regions have lower levels of economic development.

Agglomeration and Job Matching among College Graduates

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.

Bypassing the Bust: The Stability of Upstate New York’s Housing Markets During the Recession

Over the past decade, the United States has seen real estate activity swing from boom to bust. But upstate New York has been largely insulated from this volatility, with metropolitan areas such as Buffalo, Rochester, and Syracuse even registering home price increases during the recession. An analysis of upstate housing markets over the most recent residential real estate cycle indicates that the regions relatively low incidence of nonprime mortgages and the better-than-average performance of these loans contributed to this stability.

Job polarization and rising inequality in the nation and the New York-northern New Jersey region

Since the 1980s, employment opportunities in both the United States and the New York–northern New Jersey region have become increasingly polarized. While technological advances and globalization have created new jobs for workers at the high end of the skill spectrum and largely spared the service jobs of workers at the low end, these forces have displaced many jobs involving routine tasks—traditionally the sphere of middle-skill workers. Moreover, these same forces have pushed up wages for high-skill workers disproportionately, contributing to increased wage inequality. The rise in inequality has been especially sharp in downstate New York and northern New Jersey, where the wage gap is now markedly larger than in the nation.

The Role of Colleges and Universities in Building Local Human Capital

Colleges and universities can contribute to the economic success of a region by deepening the skills and knowledge—or human capital—of its residents. Producing graduates who join the region’s educated workforce is one way these institutions increase human capital levels. In addition, the knowledge and technologies created through research activities at area universities may not only attract new firms to a region but also help existing businesses expand and innovate. These “spillover effects” can in turn raise the region’s demand for high-skilled workers.

Hedonic Price Indexes for Personal Computer Operating Systems and Productivity Suites

Results of hedonic price regressions for personal computer operating systems and productivity suites advertised in PC World magazine by retail vendors during the time period 1984 to 2000 are reported. Among the quality attribute variables we use are new measures capturing the presence of network effects in personal computer operating systems, such as connectivity and compatibility, and product integration among components of productivity suites. Average annual growth rates of quality-adjusted prices of personal computer operating systems range from -15 to -18 percent, while those for productivity suites generally range between -13 and -16 percent. Price declines are generally greater in the latter half of the samples.