TY  - RPRT
        AU  - Hirsch, Boris
AU  - Jahn, Elke J.
AU  - Oberfichtner, Michael
        TI  - The Urban Wage Premium in Imperfect Labour Markets
        PY  - 2016/Jan/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 9635
        UR  - https://www.iza.org/index.php/publications/dp9635
        AB  - Using administrative data for West Germany, this paper investigates whether part of the urban wage premium stems from fierce competition in thick labour markets. We first establish that employers possess less wage-setting power in denser markets. Local differences in wage-setting power predict 1.1-1.6% higher wages from a 100 log points increase in population density. We further document that the observed urban wage premium from such an increase drops by 1.1-1.4pp once conditioning on local search frictions. Our results therefore suggest that a substantial part of the urban wage premium roots in differential imperfections across local labour markets.
        KW  - monopsony
KW  - imperfect labour markets
KW  - urban wage premium
KW  - search frictions
        ER  -