Wage Premia in Employment Clusters: Agglomeration or Worker Heterogeneity?

Shihe Fu () and Stephen Ross

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: This paper tests whether the correlation between wages and the spatial concentration of employment can be explained by unobserved worker productivity differences. Residential location is used as a proxy for a worker’s unobserved productivity, and average workplace commute time is used to test whether location based productivity differences are compensated away by longer commutes. Analyses using confidential data from the 2000 Decennial Census Long Form find that the agglomeration estimates are robust to comparisons within residential location and that the estimates do not persist after controlling for commutes suggesting that the productivity differences across locations are due to agglomeration, rather than productivity differences across individuals.

Keywords: Agglomeration; Wages; Sorting; Locational Equilibrium; Human Capital Externalities (search for similar items in EconPapers)
JEL-codes: J24 J31 R13 R30 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2010-02
New Economics Papers: this item is included in nep-geo, nep-lab and nep-ure
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Citations: View citations in EconPapers (26)

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https://www2.census.gov/ces/wp/2010/CES-WP-10-04.pdf First version, 2010 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:10-04

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