Building Bridges and Widening Gaps: Wage Gains and Equity Concerns of Labor Market Expansions

Løken, Katrine, Bütikofer, Aline and Willén, Alexander
Authors registered in the RePEc Author Service: Alexander Willén (), Katrine Vellesen Løken and Aline Bütikofer

No 14287, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We exploit the construction of the Oresund bridge, which connects a medium-sized city in Sweden to the capital of Denmark, to study the labor market effects of gaining access to a larger labor market. Using unique cross-country matched registry data that allow us to follow individuals across the border, we find that the bridge led to a substantial increase in cross-country commuting among Swedish residents. This effect is driven both by extensive and intensive margin employment responses, and translates into a 15% increase in the average wage of Swedish residents. However, the wage effects are unevenly distributed: the effect is largest for high-educated men and smallest for low-educated women. Thus, the wage gains come at the cost of increased income inequality and a widening of the gender wage gap, both within- and across-households. We show that these inequality effects are driven not only by differences in the propensity to commute, but also by educational specialization.

Keywords: Labor market expansions; Wages; Equity concerns (search for similar items in EconPapers)
JEL-codes: J3 J62 (search for similar items in EconPapers)
Date: 2020-01
New Economics Papers: this item is included in nep-eur and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Working Paper: Building Bridges and Widening Gaps: Wage Gains and Equity Concerns of Labor Market Expansions (2020)
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