The urban wage premium in imperfect labour markets

Michael Oberfichtner, Boris Hirsch and Elke Jahn

VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association

Abstract: Using administrative data for West Germany, we investigate whether part of the urban wage premium stems from fierce competition in thick labour markets. We first document fewer search frictions in denser labour markets. We further show that controlling for search frictions lowers the wage premium from a one standard deviation rise in log population density by 1.3 1.4pp in specifications including worker fixed effects. We lastly find less monopsony power in denser markets. Regional differences in monopsony power predict a wage premium of 1.4 1.9%, thereby accounting for the observed drop in the premium when controlling for labour market frictions.

JEL-codes: J31 J42 R23 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-geo and nep-ure
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Related works:
Journal Article: The Urban Wage Premium in Imperfect Labor Markets (2022)
Working Paper: The urban wage premium in imperfect labor markets (2020)
Working Paper: The urban wage premium in imperfect labour markets (2019)
Working Paper: The urban wage premium in imperfect labour markets (2019)
Working Paper: The urban wage premium in imperfect labour markets (2019)
Working Paper: The Urban Wage Premium in Imperfect Labour Markets (2016)
Working Paper: The urban wage premium in imperfect labour markets (2016)
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