Dynamic agglomeration effects of foreigners and natives – The role of experience in high-quality sectors, tasks and establishments

Abstract

We analyze whether the benefits of work experience that was acquired in denser locations can be explained by the quality of jobs that can be found in agglomerations using administrative data on individual employment biographies of workers in Germany. We find that 79% of the premium for work experience gained in the densest regions can be ascribed to the sectors, tasks and establishments in which experience was acquired. Moreover, we find that foreign and native workers, on average, benefit to a similar extent from dynamic agglomeration effects. However, low-skilled foreign workers receive a lower return to experience gained in dense regions than observationally identical natives. This difference can be explained by the fact that the former gain work experience in lower-quality jobs.