Black and Latinx workers reap lower rewards than White workers from years spent working in big cities

Maximilian Buchholz and Michael Storper

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The large labor markets of big cities offer greater possibilities for workers to gain skills and experience through successively better employment opportunities. This “experience effect” contributes to the higher average wages that are found in big cities compared to the economy as a whole. Racial wage inequality is also higher in bigger cities than in the economy on average. We offer an explanation for this pattern, demonstrating that there is substantial racial inequality in the economic returns to work experience acquired in big cities. Using data from the National Longitudinal Survey of Youth, 1979 we find that each year of work experience in a big city increases Black and Latinx workers’ wages by about one quarter to half as much as White workers’ wages. A substantial amount of this inequality can be explained by further racial disparities in the benefits of high-skill work experience. This research identifies a heretofore unknown source of inequality that is distinctly urban in nature, and expands our knowledge of the challenges to reaching interracial wage equality.

Keywords: racial inequality; urban wage premium; agglomeration; geography; cost-of-living (search for similar items in EconPapers)
JEL-codes: J01 R14 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2025-02-11
References: Add references at CitEc
Citations:

Published in Proceedings of the National Academy of Sciences of the United States of America, 11, February, 2025, 122(6). ISSN: 0027-8424

Downloads: (external link)
http://eprints.lse.ac.uk/127303/ Open access version. (application/pdf)

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:ehl:lserod:127303

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().