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Wages and the City. Evidence from Italy

  • Sabrina Di Addario

    (University of Oxford and Bank of Italy)

  • Eleonora Patacchini

    (University of Rome “La Sapienza”)

We analyze empirically the impact of urban agglomeration on Italian wages. Using microdata from the Bank of Italy\'s Survey of Household Income and Wealth for the years 1995, 1998, 2000 and 2002 on more than 22,000 employees distributed in 242 randomly drawn local labor markets, we test whether the structure of wages varies with urban scale. We find that every additional 100,000 inhabitants in the local labor market raises earnings by 0.1 percent. The use of a geographical approach enables us to state that this effect decays very rapidly with distance, losing significance beyond approximately 12 kilometers. We also find that urbanization does not affect returns to experience and that it reduces returns to education and to tenure with current firm, while providing a premium to worker supervisors and office workers.

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Paper provided by Centro Studi Luca d\'Agliano, University of Milano in its series Development Working Papers with number 231.

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Length: 29
Date of creation: 01 May 2007
Date of revision:
Handle: RePEc:csl:devewp:231
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