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Title: Workplace Social Interaction and Wage Premium

Citation Type: Conference Paper

Publication Year: 2012

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Abstract: Many existing studies use employment density to measure labor market agglomeration economies and find that agglomeration economies raise wages in employment clusters. We argue that social interaction is the channel through which agglomeration economies take place and are captured by workers. Using the 2000 U.S. census data and occupation attributes data, we construct variables to measure a workers face-to-face communication, non-face-to-face communication, and overall social interaction skills. We find that social interaction skills contribute to wages, consistent with the studies on the returns to skills in urban labor markets. More importantly, we find that a worker with little social interaction skills cannot benefit from agglomeration economies and workers with higher social interaction skills benefit more from agglomeration economies. The findings are robust to many specifications and support the idea that the fundamental role of cities is to promote social interactions.

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Authors: Gao, Xiang; Fu, Shihe

Conference Name: IZA Conferences

Publisher Location: Georgetown University, Washington, DC

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure

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