Scandinavian Working Papers in Economics

Ratio Working Papers,
The Ratio Institute

No 256: Migration, Careers and the Urban Wage Premium: Does Human Capital Matter?

Martin Korpi () and William A.V. Clark
Additional contact information
Martin Korpi: The Ratio institute, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden
William A.V. Clark: California Center for Population Research, UCLA

Abstract: Using detailed Swedish full population data on regional migrants, this paper addresses the question of whether the urban wage premium, and “thick” labor market matching effects, are found only among the higher educated or across all educational groups, and whether the urban population threshold for these type of effects varies by educational category. Estimating initial wages, average wage level and wage growth 2001-2009, we find similar matching effects for all educational groups in the three largest metropolitan areas, but very weak effects for cities ranked 4th - 6th in the urban hierarchy. Our findings suggest that positive urban matching effects are not limited to those with higher education, but that there are distinct population thresholds for these type of effects, regardless of educational background.

Keywords: Human capital; urban wage premium; domestic migration; market thickness; mobility; agglomeration economies

JEL-codes: J31; J61; R10; R12

25 pages, August 27, 2015

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