The Wage Premium in Italian Cities

Andrea Lamorgese, Elisabetta Olivieri and Marco Paccagnella

Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, 2019, vol. 5, issue 2, No 4, 279 pages

Abstract: Abstract In most countries urban workers enjoy higher wages than non urban ones, and this premium increases with the size of the city. In this paper we show that in Italy hourly wages of private-sector workers are 6% higher in urban areas than in non-urban local labor markets (less than 2% controlling for observable workers’ characteristics); this premium is higher for more educated workers and for women. More generally, as the local population grows, hourly wages tend to increase: doubling population increases wages by 2.1% (less than 1% net of workers’ characteristics). Even larger gaps are usually estimated in other developed countries. Using an employer-employee dataset and a standard AKM wage decomposition, we divide Italian wages into two components, one proxying for worker’s skills and the other one proxying for firm’s quality. We find that better workers and better firms both tend to sort themselves in urban areas. Nevertheless, the sorting of workers seems to be more relevant than the sorting of firms, resulting in a larger urban premium for the workers’ component. The sorting of firms is almost entirely explained by a few characteristics of the local labor market, such as higher educational attainment and labor market participation.

Keywords: Urban wage premium; City; AKM; J31; J61; R23 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s40797-019-00099-8 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:italej:v:5:y:2019:i:2:d:10.1007_s40797-019-00099-8

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/40797

DOI: 10.1007/s40797-019-00099-8

Access Statistics for this article

Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti is currently edited by Roberto Cellini

More articles in Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti from Springer, Società Italiana degli Economisti (Italian Economic Association) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().