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Title: The Wage Gap between Metropolitan and Non-metropolitan Areas

Citation Type: Conference Paper

Publication Year: 2004

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Abstract: In the literature on measured wage inequality, only one recent study, by Glaeser and Mare' (2001), has focused on the enormous wage gap between urban and non-urban workers in the United States. In the present paper, I replicate and extend Glaeser and Mare's original empirical work, and I present a new interpretation of the evidence based on my re-estimation. Contrary to Glaeser and Mare's theory that urban employment induces more rapid skill acquisition, I find that wage growth is no greater for urban workers than for non-urban workers. I show that both the original and extended empirical patterns can be fully explained by a simple spatial equilibrium model that incorporatestwo highly plausible phenomena: (1) a compensating wage differential for the higher cost of living in cities and (2) a dynamic tendency for more able workers to gravitate to cities once they discover that they belong in the big leagues.

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Authors: Kim, Bonggeun

Conference Name: Econometric Society 2004 Australasian Meetings

Publisher Location: Melbourne, Australia

Data Collections: IPUMS USA

Topics: Other

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