Real Estate Papers

Document Type

Journal Article

Date of this Version

3-2008

Publication Source

Journal of Urban Economics

Volume

63

Issue

2

Start Page

723

Last Page

742

DOI

10.1016/j.jue.2007.04.004

Abstract

Spatial wage disparities can result from spatial differences in the skill composition of the workforce, in non-human endowments, and in local interactions. To distinguish between these explanations, we estimate a model of wage determination across local labour markets using a very large panel of French workers. We control for worker characteristics, worker fixed effects, industry fixed effects, and the characteristics of the local labour market. Our findings suggest that individual skills account for a large fraction of existing spatial wage disparities with strong evidence of spatial sorting by skills. Interaction effects are mostly driven by the local density of employment. Not controlling for worker heterogeneity leads to very biased estimates of interaction effects. Endowments only appear to play a small role.

Copyright/Permission Statement

©2008. This manuscript version is made available under the CC-BY-NC-ND 4.0 license.

Comments

  • At the time of publication, author Gilles Duranton was affiliated with the University of Toronto. Currently, he is a faculty member at the Real Estate Department at the University of Pennsylvania.

Keywords

local labour markets, spatial wage disparities, panel data analysis, sorting

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Date Posted: 27 November 2017

This document has been peer reviewed.