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Title: Smart City: Learning Effects and Labor Force Entry

Citation Type: Miscellaneous

Publication Year: 2012

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Abstract: This paper assesses the extent to which cities promote wage growth after labor force entry and how this extent varies by unobserved learning ability for different sized cities. I incorporate this growth attribute the learning effect into a standard inter-city framework to specify average earnings equations given location choices. Using a wage growth measure constructed from wages and migration histories of two adjacent cohorts in the 2000 census to quantify the learning effect, empirical estimates indicate that college graduates starting work in big cities on average have a 7 percent higher wage growth over the five-year period immediately following labor force entry than their counterparts who begin in small cities. I use a variation in average learning ability within a city-size category across birth states to identify the rate of return to learning ability in this category. The results suggest that big cities promote wage growth, especially for high learning ability young workers. However, such return to learning ability is absent in small cities and rural areas. Estimates imply that positive sorting by learning ability into big cities when first entering the labor force is a salient feature for college graduates born in rural states.

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Authors: Wang, Zhi

Publisher: Brown University

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure, Migration and Immigration

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