Urban Agglomeration, Wages and Selection: Evidence from Samples of Siblings

47 Pages Posted: 17 Oct 2011

See all articles by Harry A. Krashinsky

Harry A. Krashinsky

University of Toronto - Centre For Industrial Relations

Date Written: October 17, 2011

Abstract

The large and significant relationship between city population and wages has been well established in the agglomeration literature, and the influence of selection effects on this wage premium is important. This paper contributes new evidence to the understanding of this premium by using two different data sets of siblings in order to estimate the agglomeration premium while controlling for unobserved heterogeneity with a family-specific fixed effect. The inclusion of a familial fixed effect into the regression framework makes the city-size wage premium insignificant, and there is a large return to a variable representing the correlation between familial ability and residence in an urban area in all of the data sets used in the analysis. The results are discussed in the context of the existing literature, and they demonstrate the importance of family background and selection effects for interpreting the agglomeration premium, which is small in the fixed effects regression.

Suggested Citation

Krashinsky, Harry A., Urban Agglomeration, Wages and Selection: Evidence from Samples of Siblings (October 17, 2011). Labour Economics, Vol. 18, No. 1, 2011, Available at SSRN: https://ssrn.com/abstract=1945398

Harry A. Krashinsky (Contact Author)

University of Toronto - Centre For Industrial Relations ( email )

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