Wage growth, urbanization, and firm characteristics: Evidence for Germany

Markus Kelle

No 631, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: I use German administrative data for 2001-2010 to analyse the impact of urbanization and firm characteristics on wage growth of workers. I find a statistically highly significant higher within-job wage growth rate for workers in counties with a higher population density. This provides evidence that workers' productivity growth is higher in denser regions, which could be explained by faster learning or human capital accumulation of workers. However, this effect turns insignificant once I account for the number of employees of the workers' firms, the share of highly educated workers in the firm and wagelevel firm fixed effects. This indicates that such a learning effect may occur rather within firms than between workers in a region. Beyond this, the paper presents evidence that workers in denser areas also benefit more from job changes within counties. One reason for that is that workers in denser regions match more often with high-wage firms. Furthermore, I find evidence that also the efficiency of the worker-firm matches is higher in denser areas.

Keywords: wage growth; learning; urbanization; firm characteristics (search for similar items in EconPapers)
JEL-codes: J24 R11 R23 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-bec, nep-geo, nep-lma and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:631

DOI: 10.4419/86788733

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