DETERMINATION OF THE URBAN WAGE PREMIUM IN ECUADOR

This paper aims to determine the urban wage premium in Ecuador. It estimates two wage equations with the nominal and real wage, using instrumental variables to control endogeneity. Four indicators are applied to measure up the urban premium: area, classification by size of a city, cantonal population, and number of firms per capita. The latter is used for the first time and proves to be a better measure to reflect the urban premium. The results show that workers located in metropolis and big cities earn wages 14% and 4% higher than those workers located in small towns, respectively. The wage elasticity is 0.03% with respect to cantonal population, and 0.06% with respect to the number of firms.

Agglomeration Effect of Skill-Based Local Labor Pooling: Evidence of South Korea

Since workplace skills present diverse dimensions of a worker’s ability, it has recently received renewed interest by researchers examining the growth of cities. The purpose of the paper explores the advantage of regional concentrations of workers specialized in different types of skills. Specifically, the analysis estimates the agglomeration effects of skill-based labor pooling on wage levels and wage growth in South Korea. To this end, it constructs skill-based labor pool indices for cognitive, social, technical, and physical skills at a provincial level. The indices show an uneven geographical distribution in varying degrees across four types of skills. The regression results indicate that the urban wage premium of skill-based local labor pooling varies according to types of skills. The greatest magnitude of benefit is incurred by workers in cognitive-skill-oriented occupations and moderate benefits are found in technical- and physical-skill-oriented occupations. An urban wage premium is non-existent in social-skill-oriented occupations. In addition, the wage growth model with job mobility shows that the urban wage premium immediately affects workers who change jobs and relocate to denser areas. As high-wage occupations earn higher wage premiums when workers in these occupations are concentrated, it supports patterns of the polarization of both skills and their effects.

Work of the Past, Work of the Future

US cities today are vastly more educated and skill-intensive than they were five decades ago. Yet, urban non-college workers perform substantially less skilled jobs than decades earlier. This deskilling reflects the joint effects of automation and, secondarily, rising international trade, which have eliminated the bulk of non-college production, administrative support, and clerical jobs, yielding a disproportionate polarization of urban labor markets. The unwinding of the urban non-college occupational skill gradient has, I argue, abetted a secular fall in real non-college wages by: (1) shunting non-college workers out of specialized middle-skill occupations into low-wage occupations that require only generic skills; (2) diminishing the set of non-college workers that hold middle-skill jobs in high-wage cities; and (3) attenuating, to a startling degree, the steep urban wage premium for non-college workers that prevailed in earlier decades. Changes in the nature of work--many of which are technological in origin--have been more disruptive and less beneficial for non-college than college workers.

Local labor market size and qualification mismatch

This paper investigates the effect of the size of the local labor market on skill mismatch. Using survey data for Germany, I find that workers in large cities are both less likely to be overqualified for their job and to work in a different field than the one for which they trained. Different empirical strategies are employed to account for the potential sorting of talented workers into more urbanized areas. Results on individuals who have never moved away from the place in which they grew up and fixed effects estimates obtaining identification through regional migrants suggest that sorting does not fully explain the existing differences in qualification mismatch across areas. This provides evidence of the existence of agglomeration economies through better matches. However, lower qualification mismatch in larger cities is found to explain at best a small part of the urban wage premium.