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Wage Premia in Employment Clusters: Agglomeration or Worker Heterogeneity?

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  • Shihe Fu
  • Stephen L. Ross

Abstract

This paper tests whether the correlation between wages and the spatial concentration of employment can be explained by unobserved worker productivity differences. Residential location is used as a proxy for a worker’s unobserved productivity, and average workplace commute time is used to test whether location based productivity differences are compensated away by longer commutes. Analyses using confidential data from the 2000 Decennial Census Long Form find that the agglomeration estimates are robust to comparisons within residential location and that the estimates do not persist after controlling for commutes suggesting that the productivity differences across locations are due to agglomeration, rather than productivity differences across individuals.

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File URL: ftp://ftp2.census.gov/ces/wp/2010/CES-WP-10-04.pdf
File Function: First version, 2010
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Bibliographic Info

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 10-04.

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Length: 56 pages
Date of creation: Feb 2010
Date of revision:
Handle: RePEc:cen:wpaper:10-04

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Related research

Keywords: Agglomeration; Wages; Sorting; Locational Equilibrium; Human Capital Externalities;

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Cited by:
  1. Rupert, Peter & Stancanelli, Elena G. F. & Wasmer, Etienne, 2009. "Commuting, Wages and Bargaining Power," IZA Discussion Papers 4510, Institute for the Study of Labor (IZA).
  2. Matthias Wrede, 2009. "Heterogeneous Skills and Homogeneous Land: Segmentation and Agglomeration," MAGKS Papers on Economics 200922, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  3. MORIKAWA Masayuki, 2011. "Urban Density, Human Capital, and Productivity: An empirical analysis using wage data," Discussion papers 11060, Research Institute of Economy, Trade and Industry (RIETI).
  4. Ben Dachis, 2013. "Cars, Congestion and Costs: A New Approach to Evaluating Government Infrastructure Investment," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 385, July.

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