What explains the urban wage premium? Sorting, non-portable or portable agglomeration effects?

Hanna Frings and Rebecca Kamb

No 916, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: Using administrative data for West Germany, we study the relative importance of different determinants of the urban wage premium. More explicitly, we distinguish worker sorting, as well as portable and non-portable agglomeration effects. Our results indicate that worker sorting explains about two thirds of the urban-rural wage gap. We show that the estimated fraction of the urban wage premium attributed to worker sorting differs considerably depending on the selectivity of the sample used for identification and provide guidance how this selectivity can be reduced. Agglomeration effects explain about one third of the urban wage premium, with portable and non-portable agglomeration effects being of similar importance.

Keywords: Urban wage premium; sorting; agglomeration (search for similar items in EconPapers)
JEL-codes: J31 J60 R23 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-cwa, nep-geo, nep-isf, nep-lab and nep-ure
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/236640/1/1765408261.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:916

DOI: 10.4419/96973062

Access Statistics for this paper

More papers in Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().