Cities and Growth: Earnings Levels Across Urban and Rural Areas: The Role of Human Capital

Bruce Newbold

The Canadian Economy in Transition from Statistics Canada, Economic Analysis Division

Abstract: Using 2001 Census data, this paper investigates the extent to which the urban-rural gap in the earnings of employed workers is associated with human capital composition and agglomeration economies. Both factors have been theoretically and empirically linked to urban-rural earnings differences. Agglomeration economies-the productivity enhancing effects of the geographic concentration of workers and firms-may underlie these differences as they may be stronger in larger urban centres. But human capital composition may also drive the urban-rural earnings gap if workers with higher levels of education and/or experience are more prevalent in cities. The analysis finds that up to one-half of urban-rural earnings differences are related to human capital composition. It also demonstrates that agglomeration economies related to city size are associated with earnings levels, but their influence is significantly reduced by the inclusion of controls for human capital.

Keywords: Education; training and learning; Business performance and ownership; Labour; Educational attainment; Regional and urban profiles; Wages; salaries and other earnings (search for similar items in EconPapers)
Date: 2010-01-25
New Economics Papers: this item is included in nep-edu, nep-geo, nep-hrm, nep-lab and nep-ure
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:stc:stcp1e:2010020e

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