Title

Do Urban Agglomeration Effect and Household Amenities have a Skills Bias?

Document Type

Article

Publication Date

5-2004

Source Publication

Journal of Regional Science

Abstract

There are several hypotheses why urban scale affects wages. Most focus on agglomeration economies that increase labor demand, especially for high-skilled workers (e.g., dynamic externalities stress knowledge transfers, and imply the urban wage gap favors skilled workers). Others stress urban amenities that increase labor supply and decrease wages. Amenities should have a stronger influence on affluent households if they are normal goods. By examining whether urban-scale affects net returns to education, it can be determined whether skilled workers are influenced more by urban productivity or amenities. Empirical results suggest net returns to education decline with urban scale, implying a key role for urban amenities in affecting skilled workers.

Comments

Journal of Regional Science, Volume 44, Issue 2, pp 204-224 (May. 2004). DOI: 10.1111/j.0022-4146.2004.00334.x