Music in the air: estimating the social return to cultural amenities

Oliver Falck, Michael Fritsch, Stephan Heblich*, Anne Otto

*Corresponding author for this work

Research output: Contribution to journalArticle (Academic Journal)peer-review

7 Citations (Scopus)
236 Downloads (Pure)

Abstract

If being around smart people makes us smarter and more productive, what can regions do to attract smart people? This paper considers endogenous cultural amenities as a location factor for high-skilled workers. To overcome selection in the provision of cultural amenities, we exploit variation in contemporaneous cultural amenities that is explained by the path-dependence of historical agglomerations of the cultural activities. To assess spillovers from high-skilled workers attracted by cultural amenities, we use a 1% sample drawn from the population of all West German workers under social security during the period 1975–2010. This panel of individual observations allows us to compare wages of similar individuals who work in locations with different levels of high-skilled workers who are attracted by cultural amenities. To account for non-random selection of workers among cities, we use individual-location fixed effects. Our results show that cultural amenities are an important factor in the location decision of high-skilled workers. The positive effect of the local share of high-skilled workers on unskilled, skilled and high-skilled wages indicates strong and productive spillovers.

Original languageEnglish
Number of pages28
JournalJournal of Cultural Economics
Early online date10 Jan 2018
DOIs
Publication statusE-pub ahead of print - 10 Jan 2018

Structured keywords

  • ECON Applied Economics
  • ECON CEPS Environment

Keywords

  • Cultural amenities
  • High-skilled workers
  • Location factor
  • Productive spillovers

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