The Review of Economic Studies · 2016 · 680 citations · 35 references
Social SciencesEconomicsEconomic GeographyLabor EconomicsUrban EconomicsAgglomeration EconomiesCity SizeIncome DistributionIndustrial LocationPersonnel EconomicsUrban ProductivityAdministrative Data SourcesIndividual Fixed EffectsSkill-based SortingSortingUnobserved Individual EffectsUrban Wage PremiumsWork In Urban Contexts
Individual earnings are higher in bigger cities.We consider three reasons: spatial sorting of initially more productive workers, static advantages from workers' current location, and learning by working in bigger cities. Using rich administrative data for Spain, we find that workers in bigger cities do not have higher initial unobserved ability as reflected in fixed effects. Instead, they obtain an immediate static premium and accumulate more valuable experience. The additional value of experience in bigger cities persists after leaving and is stronger for those with higher initial ability. This explains both the higher mean and greater dispersion of earnings in bigger cities.
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Handbook of Regional and Urban Economics
Yannis M. Ioannides · Regional Science and Urban Economics · 2003 · 1.5K citations