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City Air or City Markets: Productivity Gains in Urban Areas

  • Krupka, Douglas J.

    (University of Michigan)

Persistent productivity gains to rural-urban migrants have been documented by a number of researchers. One interpretation of this result is that individuals learn higher value skills in cities than they would have learned in less dense areas. Another explanation for this result, however, is that thicker urban labor markets allow for better matches, which are realized slowly through a process of subsequent job searches. Surprisingly, there has been no empirical test of these two interpretations to this date. This paper uses NLSY79 geocode data to assess whether wage growth of urban workers is due primarily to time spent in the urban environment (and thus learning), or job changes. The evidence suggests that both these processes are probably at work.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3230.

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Length: 29 pages
Date of creation: Dec 2007
Date of revision:
Handle: RePEc:iza:izadps:dp3230
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  1. Charlot, Sylvie & Duranton, Gilles, 2003. "Communication Externalities in Cities," CEPR Discussion Papers 4048, C.E.P.R. Discussion Papers.
  2. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
  3. Holtz-Eakin, Douglas & Lovely, Mary E., 1996. "Scale economies, returns to variety, and the productivity of public infrastructure," Regional Science and Urban Economics, Elsevier, vol. 26(2), pages 105-123, April.
  4. Helsley, Robert W. & Strange, William C., 1990. "Matching and agglomeration economies in a system of cities," Regional Science and Urban Economics, Elsevier, vol. 20(2), pages 189-212, September.
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