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The Effects of Agglomeration on Wages: Evidence from the Micro-Level

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  • Bernard Fingleton
  • Simonetta Longhi

Abstract

This paper estimates individual wage equations in order to test two rival non-nested theories of economic agglomeration, namely New Economic Geography (NEG), as represented by the NEG wage equation and urban economic (UE) theory, in which wages relate to employment density. The paper makes an original contribution by evidently being the first empirical paper to examine the issue of agglomeration processes associated with contemporary theory working with micro-level data, highlighting the role of gender and other individual-level characteristics. For male respondents, there is no significant evidence that wage levels are an outcome of the mechanisms suggested by NEG or UE theory, but this is not the case for female respondents. We speculate on the reasons for the gender difference.

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Bibliographic Info

Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0081.

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Date of creation: Jun 2011
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Handle: RePEc:cep:sercdp:0081

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Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

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Keywords: urban economics; new economic geography; household panel data;

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  1. Steven Brakman & Harry Garretsen & Charles van Marrewijk, 2009. "Economic Geography within and between European Nations: The Role of Market Potential and Density across Space and Time," CESifo Working Paper Series 2658, CESifo Group Munich.
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  8. Pierre-Philippe Combes & Gilles Duranton & Henry G. Overman, 2005. "Agglomeration and the adjustment of the spatial economy," LSE Research Online Documents on Economics 675, London School of Economics and Political Science, LSE Library.
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  12. David Roodman, 2007. "A Note on the Theme of Too Many Instruments," Working Papers 125, Center for Global Development.
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  15. Marco Francesconi & Holly Sutherland & Francesca Zantomio, 2011. "A comparison of earnings measures from longitudinal and cross‐sectional surveys: evidence from the UK," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 174(2), pages 297-326, 04.
  16. Bernard Fingleton, 2006. "The new economic geography versus urban economics: an evaluation using local wage rates in Great Britain," Oxford Economic Papers, Oxford University Press, vol. 58(3), pages 501-530, July.
  17. Bernard Fingleton, 2011. "The empirical performance of the NEG with reference to small areas," Journal of Economic Geography, Oxford University Press, vol. 11(2), pages 267-279, March.
  18. Maarten Bosker & Harry Garretsen, 2010. "Trade costs in empirical New Economic Geography," Papers in Regional Science, Wiley Blackwell, vol. 89(3), pages 485-511, 08.
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Cited by:
  1. Ulrich Zierahn, 2012. "The effect of market access on the labor market: Evidence from German reunification," MAGKS Papers on Economics 201239, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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