Knowledge Spillovers from Cross Border Commuters: Evidence from a Natural Experiment

Abstract : 

How is knowledge transmitted across borders? We exploit the construction of the Øresund bridge which joined the capital region of Denmark with Malmö in Sweden, creating an integrated labor market. The bridge led to a steep increase in cross-border commuting, predominantly one-way from Sweden to Denmark. We examine the consequences of Swedish cross-border workers on the productivity of Danish firms and the wages of their close coworkers. We find substantial positive effects in Danish firms that (exogenously) increase the share of Swedish commuters, as cross-border commuters carry a productivity premium that likely reflects knowledge spillovers. To examine the extent of knowledge spillovers further, we estimate the impact of cross border commuters on wages of incumbent coworkers in occupations of the commuters and find a positive effect. We also find that high-skilled commuters and commuters with experience in high-tech occupations in the Swedish labor market have the strongest spillover effects on the wages of Danish coworkers.