In the literature on measured wage inequality, only one recent study, by Glaeser and Mare(2001), has focused on the enormous wage gap between urban and non-urban workers in the United States. In the present paper, I replicate and extend Glaeser and Mare's original empirical work, and I present a new interpretation of the evidence based on my re-estimation. Contrary to Glaeser and Mare's theory that urban employment induces more rapid skill acquisition, I find that wage growth is no greater for urban workers than for non-urban workers. I show that both the original and extended empirical patterns can be fully explained by a simple spatial equilibrium model that incorporates two highly plausible phenomena: (1) a compensating wage differential for the higher cost of living in cities and (2) a dynamic tendency for more able workers to gravitate to cities once they discover that they belong in the "big leagu
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Glaeser, Edward L & Mare, David C, 2001.
"Cities and Skills,"
Journal of Labor Economics,
University of Chicago Press, vol. 19(2), pages 316-42, April.
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Other versions:
Glaeser, E.L. & Mare, D.C., 1994.
"Cities and Skills,"
Papers
e-94-11, Stanford - Hoover Institution.
Edward L. Glaeser & David C. Mare, 1994.
"Cities and Skills,"
NBER Working Papers
4728, National Bureau of Economic Research, Inc.
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