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Wage distribution and the spatial sorting of workers and firms

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  • Alessia Matano
  • Paolo Naticchioni

    (Dipartimento di Economia, Sapienza University of Rome Italy)

Abstract

Spatial sorting plays an important role in accounting for disparities in average wages among locations. This paper shows that sorting also matters when addressing the relation between spatial externalities and wage distribution, i.e. across workers located at di erent percentiles of the wage distribution. Using Italian employer-employee panel data we can control for individual and firm heterogeneity as well as for unobserved individual heterogeneity by means of quantile fixed e ects estimates. After controlling for the sorting of workers the spatial externality impacts dampen along the whole wage distribution and generally remain positive only in the upper tail. As for firm sorting, it becomes uniform along the wage distribution once individual fixed effects are considered. We also point out that the impact of worker sorting is not homogeneous across sectors: along the density dimension it occurs mainly in skill-intensive sectors, while along the specialization dimension it is concentrated in the unskill-intensive sectors.

Suggested Citation

  • Alessia Matano & Paolo Naticchioni, 2009. "Wage distribution and the spatial sorting of workers and firms," Working Papers - Dipartimento di Economia 8-DEISFOL, Dipartimento di Economia, Sapienza University of Rome, revised 2009.
    • Handle: RePEc:des:wpaper:14
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    File URL: http://dipartimento.dse.uniroma1.it/DSEISFOL/papers/Matano_Naticchioni_spatial.pdf
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    References listed on IDEAS

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    Cited by:

    1. Alessia Matano & Paolo Naticchioni, 2016. "What Drives The Urban Wage Premium? Evidence Along The Wage Distribution," Journal of Regional Science, Wiley Blackwell, vol. 56(2), pages 191-209, March.
    2. Nathaniel Baum-Snow & Ronni Pavan, 2012. "Understanding the City Size Wage Gap," Review of Economic Studies, Oxford University Press, vol. 79(1), pages 88-127.

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    More about this item

    Keywords

    Spatial Externalities; Spatial Sorting; Wage Distribution; Quantile Fixed Effects;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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