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Determination of the urban wage premium in Ecuador

Author

Listed:
  • Guevara-Rosero, Grace Carolina

    (Departamento de Economía Cuantitativa, Escuela Politécnica Nacional. Ecuador.)

  • Del Pozo, Diego

    (Dirección de Estudios y Análisis de la Información (Instituto Nacional de Estadísticas y Censos).)

Abstract

This paper, in closing the knowledge gap for developing countries, aims to estimate the urban wage premium (UWP) in Ecuador for different types of workers by using instrumental variables to address the endogeneity issue. The results show that for formal workers, the wage elasticity is 0.05/0.12 with respect to cantonal population/population density, and 0.049/0.088 with respect to the number of firms/firm density. These estimates are higher than those for informal and self-employed workers. Workers located in metropolis and big cities earn wages 9.6% and 7% higher than those workers located in small towns, respectively. Some cities stand as exceptions because they offer low UWP although they have large populations. This discrepancy could be related to poverty and the disorganized urban growth that cities in developing countries face.

Suggested Citation

  • Guevara-Rosero, Grace Carolina & Del Pozo, Diego, 2020. "Determination of the urban wage premium in Ecuador," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 47, pages 57-77.
    • Handle: RePEc:ris:invreg:0437
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    Citations

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    Cited by:

    1. Almeida, Eloiza R.F. & Araújo, Veneziano & Gonçalves, Solange L., 2022. "Urban wage premium for women: evidence across the wage distribution," World Development, Elsevier, vol. 159(C).
    2. Grace Carolina Guevara‐Rosero, 2021. "Determinants of manufacturing micro firms' productivity in Ecuador. Do industry and canton where they operate matter?," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(4), pages 1215-1248, August.

    More about this item

    Keywords

    urban wage premium; city size; wage; Latin America;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • 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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