In this paper, we investigate regional di erences in the gender pay gap both theoretically and empirically. Within a spatial oligopsony model, we show that more densely populated labour markets are more competitive and constrain employers' ability to discriminate against women. Utilising a large administrative data set for western Germany and a fexible semi-parametric propensity score matching approach, we and that the unexplained gender pay gap for young workers is substantially lower in large metropolitan than in rural areas. This regional gap in the gap of roughly ten percentage points remained surprisingly constant over the entire observation period of thirty years.
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Paper provided by Bavarian Graduate Program in Economics (BGPE) in its series Working Papers with number
083.