Urban bias and wage inequality

Jiancai Pi and Yanwei Fan

Review of Development Economics, 2019, vol. 23, issue 4, 1788-1799

Abstract: This paper explores how urban bias affects skilled–unskilled wage inequality through building several general equilibrium models. In the basic model, we find that an increase in the degree of urban bias will widen wage inequality if the unskilled sector is more capital intensive than the skilled sector and reduce wage inequality if the skilled sector is more capital intensive than the unskilled sector. In the extended models, we find that the conclusion obtained in the basic model almost still holds under different conditions.

Date: 2019
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