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Person or Place? Parametric and semiparametric estimates of intrametropolitan earnings variation

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  • J. B. Engberg
  • T. Kim
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    Abstract

    Some scholars have attributed earnings differences among locations to labor market conditions ("place effects") whereas others have focused on the skill level of residents ("person effects"). We estimate a variety of selection models in an effort to detect differences in labor market conditions while controlling for differences in skill levels. We maintain the assumption that there are no barriers to mobility within a metropolitan area for highly educated white men, which implies that intra-urban differences for this group reflect sorting by skill and earnings rather than real wage differences for equally productive workers. This prediction allows us to reject several conventional parametric selection models. We estimate a semiparametric selection model that yields strong evidence that, for less educated white men, the apparent suburban earnings premium is due to sorting rather than labor market differences.

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    File URL: http://www.irp.wisc.edu/publications/dps/pdfs/dp108996.pdf
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    Bibliographic Info

    Paper provided by University of Wisconsin Institute for Research on Poverty in its series Institute for Research on Poverty Discussion Papers with number 1089-96.

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    Handle: RePEc:wop:wispod:1089-96

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    1. Ihlanfeldt, Keith R & Sjoquist, David L, 1990. "Job Accessibility and Racial Differences in Youth Employment Rates," American Economic Review, American Economic Association, American Economic Association, vol. 80(1), pages 267-76, March.
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    5. Thomas Mroz, . "The Sensitivity of an Empirical Model of Married Women's Hours of Work to Economic and Statistical Assumptions," University of Chicago - Population Research Center, Chicago - Population Research Center 84-8, Chicago - Population Research Center.
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    7. O'Regan, Katherine M. & Quigley, John M., 1996. "Spatial Effects Upon Employment Outcomes: The Case of New Jersey Teenagers," Department of Economics, Working Paper Series, Department of Economics, Institute for Business and Economic Research, UC Berkeley qt6cw7b2w7, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    8. Case, A.C. & Katz, L.F., 1991. "The Company You Keep: The Effects Of Family And Neighborhood On Disadvantaged Younths," Harvard Institute of Economic Research Working Papers 1555, Harvard - Institute of Economic Research.
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    13. Newey, Whitney K & Powell, James L & Walker, James R, 1990. "Semiparametric Estimation of Selection Models: Some Empirical Results," American Economic Review, American Economic Association, American Economic Association, vol. 80(2), pages 324-28, May.
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    17. Borjas, George J, 1995. "Ethnicity, Neighborhoods, and Human-Capital Externalities," American Economic Review, American Economic Association, American Economic Association, vol. 85(3), pages 365-90, June.
    18. James J. Heckman, 1989. "Choosing Among Alternative Nonexperimental Methods for Estimating the Impact of Social Programs: The Case of Manpower Training," NBER Working Papers 2861, National Bureau of Economic Research, Inc.
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    23. Ahn, Hyungtaik & Powell, James L., 1993. "Semiparametric estimation of censored selection models with a nonparametric selection mechanism," Journal of Econometrics, Elsevier, Elsevier, vol. 58(1-2), pages 3-29, July.
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