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The Sources of the Urban Wage Premium by Worker Skills

Author

Listed:
  • Andersson, Martin

    (CIRCLE, Lund University)

  • Klaesson , Johan

    (Department of Economics, Finance and Statistics, Jönköping International Business School)

  • Larsson , Johan P

    (Department of Economics, Finance and Statistics, Jönköping International Business School)

Abstract

We estimate the respective importance of spatial sorting and agglomeration economies in explaining the urban wage premium for workers with different sets of skills. Sorting is the main source of the wage premium. Agglomeration economies are in general small, but are larger for workers with skills associated with non-routine job tasks. They also appear to involve human capital accumulation, as evidenced by the change in the wage of workers moving away from denser regions. For workers with routine jobs, agglomeration economies are virtually non-existent. Our results provide further evidence of spatial density bringing about productivity advantages primarily in contexts when problem-solving and interaction with others are important.

Suggested Citation

  • Andersson, Martin & Klaesson , Johan & Larsson , Johan P, 2014. "The Sources of the Urban Wage Premium by Worker Skills," Papers in Innovation Studies 2014/6, Lund University, CIRCLE - Centre for Innovation Research.
    • Handle: RePEc:hhs:lucirc:2014_006
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    More about this item

    Keywords

    spatial sorting; selection; learning; non-routine skills; spatial wage disparities; density; agglomeration economies; innovation;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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