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Title: Urban Wage Premium and Spatial Equilibrium in the United States
Citation Type: Journal Article
Forthcoming?: Yes
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Abstract: This paper proposes a new method for testing the spatial equilibrium model that is widely used to describe the spatial economy of the United States. To do this, I examine the relationship between workers' wages and the population density they face, namely the urban wage premium (UWP). Using U.S. data from 2000 to 2019, I find that unskilled workers in non-tradable service occupations consistently have a larger UWP compared with other unskilled workers, and the difference has been increasing over time, which I take as evidence against the spatial equilibrium model being a suitable approximation for unskilled workers' behavior. In contrast, skilled workers in both service and non-service occupations have a similar UWP that has remained fairly stable over the same period. My findings also suggest that the significant decrease in unskilled workers' UWP in recent decades was driven not only by the movement of unskilled workers from middle-wage tradable jobs to low-wage non-tradable service jobs, which was particularly pronounced in big cities, but also by the decrease in UWP within both tradable and non-tradable occupations.
User Submitted?: No
Authors: Guo, Ningning
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Pages: 1-54
Data Collections: IPUMS USA
Topics: Labor Force and Occupational Structure, Population Mobility and Spatial Demography, Poverty and Welfare
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