The Role of Establishment Size in the City-Size Earnings Premium
Charly Porcher (charly.porcher@dartmouth.edu),
Hannah Rubinton and
Clara Santamaria
No 2020-029, Working Papers from Federal Reserve Bank of St. Louis
Abstract:
Both large establishments and large cities are known to offer workers an earnings premium. In this paper, we show that these two premia are closely linked by documenting a new fact: when workers move to a large city, they also move to larger establishments. We then ask how much of the city-size earnings premium can be attributed to transitions to larger and better-paying establishments. Using administrative data from Spain, we find that 38 percent of the city-size earnings premium can be explained by establishment-size composition. Most of the gains from the transition to larger establishments realize in the short-term upon moving to the large city. Establishment size explains 29 percent of the short-term gains, but only 5 percent of the medium-term gains that accrue as workers gain experience in the large city. The small contribution to the medium-term gains is due to two facts: first, within large cities workers transition to large establishments only slightly faster than in smaller cities; second, the relationship between earnings and establishment size is weaker in large cities.
Keywords: City-size wage premium; Establishment-size wage premium (search for similar items in EconPapers)
JEL-codes: R12 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2020-09-04, Revised 2022-11-29
New Economics Papers: this item is included in nep-lma, nep-upt and nep-ure
Note: Publisher DOI: https://doi.org/10.1016/j.jue.2023.103556
References: Add references at CitEc
Citations: View citations in EconPapers (2)
Published in Journal of Urban Economics
Downloads: (external link)
https://s3.amazonaws.com/real.stlouisfed.org/wp/2020/2020-029.pdf Full Text (application/pdf)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:fip:fedlwp:88708
Ordering information: This working paper can be ordered from
subscribe@stls.frb.org
DOI: 10.20955/wp.2020.029
Access Statistics for this paper
More papers in Working Papers from Federal Reserve Bank of St. Louis Contact information at EDIRC.
Bibliographic data for series maintained by Anna Oates (anna.oates@stls.frb.org).