What Drives the Urban Wage Premium? Evidence along the Wage Distribution

Alessia Matano and Paolo Naticchioni

No 13-DEISFOL, Working Papers - Dipartimento di Economia from Dipartimento di Economia, Sapienza University of Rome

Abstract: This paper aims at disentangling the role played by different theoretical explanations in accounting for the urban wage premium along the wage distribution. We analyze the wage dynamics of migrants from low-to-high-density areas in Italy, using quantile regression and individual panel data to control for the sorting of workers. The results show that skilled workers enjoy a higher wage premium when they migrate (wage level effect), in line with the agglomeration externalities explanation, while unskilled workers benefit more from a wage premium accruing over time (wage growth effect). Further, investigating the determinants of the wage growth effect in greater depth, we find that for unskilled workers the wage growth is mainly due to human capital accumulation over time, consistently with the “learning” hypothesis, while for skilled workers it is the “coordination” hypothesis that matters.

Keywords: Urban Wage Premium; Human Capital; Spatial Sorting; Wage Distribution; Quantile Fixed Effects (search for similar items in EconPapers)
JEL-codes: J31 J61 R23 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2012, Revised 2012
New Economics Papers: this item is included in nep-eur, nep-geo, nep-hrm, nep-lab, nep-lma and nep-ure
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Citations: View citations in EconPapers (18)

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Related works:
Journal Article: WHAT DRIVES THE URBAN WAGE PREMIUM? EVIDENCE ALONG THE WAGE DISTRIBUTION (2016)
Working Paper: What Drives the Urban Wage Premium? Evidence along the Wage Distribution (2013)
Working Paper: What Drives the Urban Wage Premium? Evidence along the Wage Distribution (2012)
Working Paper: What Drives the Urban Wage Premium? Evidence along the Wage Distribution (2012)
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