We combine growth theory with US Census data on individual schooling and wages to estimate the aggregate return to … human capital and human capital externalities in cities. Our estimates imply that a one-year increase in average schooling … capital externalities in cities however, although we use three different approaches. Our main theoretical contribution is to …

capital spillovers can in theory increase aggregate productivity over and above the direct effect of human capital on … externalities that accrue to local geographic areas. The focus of the chapter is on the empirical issues that arise in identifying … these externalities and on the existing empirical evidence on their magnitude. …

Identification of the strength of human capital externalities at the aggregate level is still not fully understood. The … existing method may yield positive or negative externalities even if wages reflect marginal social products. We propose an … approach that yields positive average human capital externalities if and only if the marginal social product of workers with …