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What Drives the Urban Wage Premium? Evidence along the Wage Distribution

  • Alessia Matano

    ()

    (Faculty of Economics, University of Barcelona)

  • Paolo Naticchioni

    ()

    (University of Cassino, University of Rome “La Sapienza”, CeLEG-Luiss)

This paper aims at disentangling the role played by different theoretical explanations in accounting for the urban wage premium along the wage distribution. We analyze the wage dynamics of migrants from low-to-high-density areas in Italy, using quantile regression and individual panel data to control for the sorting of workers. The results show that skilled workers enjoy a higher wage premium when they migrate (wage level effect), in line with the agglomeration externalities explanation, while unskilled workers benefit more from a wage premium accruing over time (wage growth effect). Further, investigating the determinants of the wage growth effect in greater depth, we find that for unskilled workers the wage growth is mainly due to human capital accumulation over time, consistently with the “learning” hypothesis, while for skilled workers it is the “coordination” hypothesis that matters..

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File URL: http://www.ub.edu/irea/working_papers/2012/201203.pdf
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Paper provided by University of Barcelona, Research Institute of Applied Economics in its series IREA Working Papers with number 201203.

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Length: 34 pages
Date of creation: Jan 2012
Date of revision: Feb 2012
Handle: RePEc:ira:wpaper:201203
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  1. Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon & Sébastien Roux, 2012. "Sorting and local wages and skill distributions in France," PSE - Labex "OSE-Ouvrir la Science Economique" halshs-00754585, HAL.
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  19. Jorge De la Roca & Diego Puga, 2013. "Learning By Working In Big Cities," Working Papers wp2013_1301, CEMFI.
  20. Alessia Matano & Paolo Naticchioni, 2009. "Wage distribution and the spatial sorting of workers and firms," Working Papers - Dipartimento di Economia 8-DEISFOL, Dipartimento di Economia, Sapienza University of Rome, revised 2009.
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  25. Robert H. Topel, 1990. "Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority," NBER Working Papers 3294, National Bureau of Economic Research, Inc.
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  27. Möller, Joachim & Haas, Anette, 2002. "The agglomeration wage differential reconsidered - an investigation with German micro data 1984-1997," ERSA conference papers ersa02p327, European Regional Science Association.
  28. Koenker, Roger, 2004. "Quantile regression for longitudinal data," Journal of Multivariate Analysis, Elsevier, vol. 91(1), pages 74-89, October.
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