Cities, Workers, and Wages: A Structural Analysis of the Urban Wage Premium

Eric D. Gould

Review of Economic Studies, 2007, vol. 74, issue 2, pages 477-506

Abstract: Workers earn higher wages in cities vs. rural areas. This gap could arise because cities make workers more productive, or it could be the result of a non-random selection of workers into cities based on their ability and their endogenous history of career choices. To untangle these issues, this paper estimates a dynamic programming model, which embeds the choice of residing in a city or rural area within a model of career choices over time. After controlling for all the sources of selection and endogeneity, the estimates indicate that a given worker does earn more in the city for white-collar work, but not for blue-collar work. In addition, city work experience is found to be worth more than rural work experience in the rural area for white-collar work, but not for blue-collar work. These results support the interpretation that cities make white-collar workers more productive and suggest that workers may consider moving to the city not only in terms of locational choice, but also as a form of human capital investment. Copyright 2007 The Review of Economic Studies Limited.

Date: 2007
View citations in EconPapers

Downloads: (external link)
http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-937X.2007.00428.x link to full text (text/html)
Access to full text is restricted to subscribers.

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: http://EconPapers.repec.org/RePEc:bla:restud:v:74:y:2007:i:2:p:477-506

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0034-6527

Access Statistics for this article

Review of Economic Studies is edited by Andrea Prat, Bruno Biais, Kjetil Storesletten and Enrique Sentana

More articles in Review of Economic Studies from Blackwell Publishing
Series data maintained by Christopher F. Baum ().