Dynamic agglomeration economies and learning by working in specialised regions

This study provides new evidence on the magnitude of dynamic agglomeration economies. It estimates the elasticity of entry wage with regard to the size of the regional labour markets in which previous work experience was acquired and considers, furthermore, the workforce compositions in these regions. The results indicate that not only the sheer size of regional labour markets determine individual knowledge accumulation. Benefits from acquiring experience in large labour markets by workers in service sector occupations are partly caused by human capital externalities, whereas manufacturing workers experience additional dynamic gains from localisation economies, in Germany particularly outside urban centres.