Increasing Wage Gap, Spatial Structure and Market Access: Evidence from Swedish Micro Data

Pardis Nabavi

No 409, Working Paper Series in Economics and Institutions of Innovation from Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

Abstract: The new economic geography predicts that the wage gap will increase with accessibility to markets but does not consider the impact of spatial proximity. In contrast, urban economic theory explains wage differences by density without accounting for accessibility. Using a rich Swedish micro-panel, we empirically examine the two rival theories for males and females separately, controlling for individual, firm and regional characteristics. The regression results indicate that wage dispersion is correlated with both accessibility to markets and density. However, the urban economic theory has greatest explanatory power when we control for factors such as occupation, ethnical background, skill, firm size, technical change, ownership, commuting time, unobserved heterogeneity and spatial autocorrelation.

Keywords: New economic geography; urban economics; spatial econometrics; micro panel data (search for similar items in EconPapers)
JEL-codes: C21 J30 R12 R23 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2015-06-01
New Economics Papers: this item is included in nep-geo and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:cesisp:0409

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