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Wage Premia in Employment Clusters: How Important Is Worker Heterogeneity?

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  • Shihe Fu
  • Stephen L. Ross

Abstract

This article tests whether the correlation between wages and concentration of employment can be explained by unobserved worker productivity. Residential location is used as a proxy for unobserved productivity, and average commute time to workplace is used to test whether location-based productivity differences are compensated away by longer commutes. Analyses using confidential data from the 2000 Decennial Census find that estimates of agglomeration wage premia within metropolitan areas are robust to comparisons within residential location and that estimates do not persist after controlling for commuting costs, suggesting that the productivity differences across locations are due to location, not individual unobservables.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 31 (2013)
Issue (Month): 2 ()
Pages: 271 - 304

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Handle: RePEc:ucp:jlabec:doi:10.1086/668615

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Cited by:
  1. Elizabeth Ananat & Shihe Fu & Stephen L. Ross, 2013. "Race-Specific Agglomeration Economies: Social Distance and the Black-White Wage Gap," Working papers 2013-08, University of Connecticut, Department of Economics.
  2. Dong, Baomin & Fu, Shihe & Gong, Jiong & Fan, Hanwen, 2014. "The Lame Drain," MPRA Paper 53825, University Library of Munich, Germany.
  3. Fu, Shihe & Viard, Brian, 2014. "Commute Costs and Labor Supply: Evidence from a Satellite Campus," MPRA Paper 53740, University Library of Munich, Germany.

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