IDEAS home Printed from https://ideas.repec.org/a/pes/ierequ/v11y2016i4p853-869.html
   My bibliography  Save this article

Determinants Of Hourly Wages Inequality In Selected European Metropolises. The Results From The Multilevel Modelling

Author

Listed:
  • Edyta Laszkiewicz

    (University of Lodz, Poland)

Abstract

The aim of this paper is the identification of the hourly wages heterogeneity in the sample of individuals living in 35 European metropolitan areas. Additionally, we evaluated factors which determine spatial variability. For this purpose, we applied Mincer-type multilevel models for the micro data from the European Social Survey (2010). To delimit metropolitan areas we used Urban Audit’s Larger Urban Zones. Our results suggest the greatest impact of cross-country differences in explaining metropolitan variation of wages. We confirmed the gender pay gap equal to 10-11%, the wage premium from permanent contracts (7-10%) and being responsible for supervising other workers (16%). The importance of workers and firms characteristics was proved both for individual-level and metro-level differences. It might suggests the part of inequalities between metropolises is connected with different composition of workers’ skills in each metropolis and spatial sorting. Finally, we found that unexplained (by such attributes) proportion of variability across metropolises might be the result of agglomeration effects. The positive impact of Jacobs externalities was found, while we did not confirm the existence of Marshall externalities.

Suggested Citation

  • Edyta Laszkiewicz, 2016. "Determinants Of Hourly Wages Inequality In Selected European Metropolises. The Results From The Multilevel Modelling," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 11(4), pages 853-869, December.
    • Handle: RePEc:pes:ierequ:v:11:y:2016:i:4:p:853-869
    DOI: 10.12775/EQUIL.2016.038
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.12775/EQUIL.2016.038
    Download Restriction: no
    File URL: https://libkey.io/10.12775/EQUIL.2016.038?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Edward L. Glaeser & Matthew G. Resseger, 2009. "The Complementarity between Cities and Skills," NBER Working Papers 15103, National Bureau of Economic Research, Inc.
    2. Enrico Moretti, 2013. "Real Wage Inequality," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 65-103, January.
    3. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-1278, December.
    4. D'Costa, Sabine & Overman, Henry G., 2014. "The urban wage growth premium: Sorting or learning?," Regional Science and Urban Economics, Elsevier, vol. 48(C), pages 168-179.
    5. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4, National Bureau of Economic Research, Inc.
    6. Shihe Fu & Stephen L. Ross, 2010. "Wage Premia in Employment Clusters: Agglomeration or Worker Heterogeneity?," Working Papers 10-04, Center for Economic Studies, U.S. Census Bureau.
    7. Edward L. Glaeser & Joshua D. Gottlieb, 2009. "The Wealth of Cities: Agglomeration Economies and Spatial Equilibrium in the United States," Journal of Economic Literature, American Economic Association, vol. 47(4), pages 983-1028, December.
    8. Pelkowski, Jodi Messer & Berger, Mark C., 2004. "The impact of health on employment, wages, and hours worked over the life cycle," The Quarterly Review of Economics and Finance, Elsevier, vol. 44(1), pages 102-121, February.
    9. Beaudry, Catherine & Schiffauerova, Andrea, 2009. "Who's right, Marshall or Jacobs? The localization versus urbanization debate," Research Policy, Elsevier, vol. 38(2), pages 318-337, March.
    10. Carlos R. Azzoni & Luciana M.S. Servo, 2002. "Education, cost of living and regional wage inequality in Brazil," Review of Economic Design, Springer;Society for Economic Design, vol. 81(2), pages 157-175, April.
    11. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1.
    12. Wheaton, William C. & Lewis, Mark J., 2002. "Urban Wages and Labor Market Agglomeration," Journal of Urban Economics, Elsevier, vol. 51(3), pages 542-562, May.
    13. Glaeser, Edward L & Mare, David C, 2001. "Cities and Skills," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 316-342, April.
    14. Dumond, J Michael & Hirsch, Barry T & Macpherson, David A, 1999. "Wage Differentials across Labor Markets and Workers: Does Cost of Living Matter?," Economic Inquiry, Western Economic Association International, vol. 37(4), pages 577-598, October.
    15. Harry Anthony Patrinos, 2016. "Estimating the return to schooling using the Mincer equation," IZA World of Labor, Institute of Labor Economics (IZA), pages 278-278, July.
    16. Koen Frenken & Frank Van Oort & Thijs Verburg, 2007. "Related Variety, Unrelated Variety and Regional Economic Growth," Regional Studies, Taylor & Francis Journals, vol. 41(5), pages 685-697.
    17. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-293, March.
    18. Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2008. "Spatial wage disparities: Sorting matters!," Journal of Urban Economics, Elsevier, vol. 63(2), pages 723-742, March.
    19. Alessia Matano & Paolo Naticchioni, 2016. "What Drives The Urban Wage Premium? Evidence Along The Wage Distribution," Journal of Regional Science, Wiley Blackwell, vol. 56(2), pages 191-209, March.
    20. Mikaela Backman, 2014. "Returns to Education across the Urban-Rural Hierarchy," The Review of Regional Studies, Southern Regional Science Association, vol. 44(1), pages 33-59, Spring.
    21. Stefan P.T. Groot & Henri L.F. Groot & Martijn J. Smit, 2014. "Regional Wage Differences In The Netherlands: Micro Evidence On Agglomeration Externalities," Journal of Regional Science, Wiley Blackwell, vol. 54(3), pages 503-523, June.
    22. Jacob A. Mincer, 1974. "Schooling and Earnings," NBER Chapters, in: Schooling, Experience, and Earnings, pages 41-63, National Bureau of Economic Research, Inc.
    23. Di Addario, Sabrina & Patacchini, Eleonora, 2008. "Wages and the City. Evidence from Italy," Labour Economics, Elsevier, vol. 15(5), pages 1040-1061, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Daniel Heuermann & Benedikt Halfdanarson & Jens Suedekum, 2010. "Human Capital Externalities and the Urban Wage Premium: Two Literatures and their Interrelations," Urban Studies, Urban Studies Journal Limited, vol. 47(4), pages 749-767, April.
    2. Combes, Pierre-Philippe & Gobillon, Laurent, 2015. "The Empirics of Agglomeration Economies," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 247-348, Elsevier.
    3. Shihe Fu & Stephen L. Ross, 2013. "Wage Premia in Employment Clusters: How Important Is Worker Heterogeneity?," Journal of Labor Economics, University of Chicago Press, vol. 31(2), pages 271-304.
    4. Stefan P. T. Groot & Henri L. F. Groot, 2020. "Estimating the Skill Bias in Agglomeration Externalities and Social Returns to Education: Evidence from Dutch Matched Worker-Firm Micro-Data," De Economist, Springer, vol. 168(1), pages 53-78, March.
    5. Stefan P.T. Groot & Henri L.F. Groot & Martijn J. Smit, 2014. "Regional Wage Differences In The Netherlands: Micro Evidence On Agglomeration Externalities," Journal of Regional Science, Wiley Blackwell, vol. 54(3), pages 503-523, June.
    6. Florian Lehmer & Joachim Möller, 2010. "Interrelations between the urban wage premium and firm-size wage differentials: a microdata cohort analysis for Germany," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 45(1), pages 31-53, August.
    7. Edivaldo C. Neves Jr & Carlos R. Azzoni, Andre Chagas, 2017. "Skill wage premium and city size," Working Papers, Department of Economics 2017_19, University of São Paulo (FEA-USP).
    8. Chauvin, Juan Pablo & Glaeser, Edward & Ma, Yueran & Tobio, Kristina, 2017. "What is different about urbanization in rich and poor countries? Cities in Brazil, China, India and the United States," Journal of Urban Economics, Elsevier, vol. 98(C), pages 17-49.
    9. Ridhwan, Masagus M., 2021. "Spatial wage differentials and agglomeration externalities: Evidence from Indonesian microdata," Economic Analysis and Policy, Elsevier, vol. 71(C), pages 573-591.
    10. Jordy Meekes & Wolter H. J. Hassink, 2023. "Endogenous local labour markets, regional aggregation and agglomeration economies," Regional Studies, Taylor & Francis Journals, vol. 57(1), pages 13-25, January.
    11. Diana Lúcia Gonzaga da Silva & Carlos Roberto Azzoni, 2016. "Location and wages: the contribution of firm and worker effects in Brazil," Working Papers, Department of Economics 2016_41, University of São Paulo (FEA-USP).
    12. Paul Verstraten & Gerard Verweij & Peter Zwaneveld, 2018. "Why do wages grow faster in urban areas? Sorting of high potentials matters," CPB Discussion Paper 377, CPB Netherlands Bureau for Economic Policy Analysis.
    13. Paul Verstraten & Gerard Verweij & Peter Zwaneveld, 2018. "Why do wages grow faster in urban areas? Sorting of high potentials matters," CPB Discussion Paper 377.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    14. Matthias Wrede, 2013. "Heterogeneous skills and homogeneous land: segmentation and agglomeration," Journal of Economic Geography, Oxford University Press, vol. 13(5), pages 767-798, September.
    15. MORIKAWA Masayuki, 2011. "Urban Density, Human Capital, and Productivity: An empirical analysis using wage data," Discussion papers 11060, Research Institute of Economy, Trade and Industry (RIETI).
    16. Gustavo A. García, 2019. "Agglomeration economies in the presence of an informal sector: the Colombian case," Revue d'économie régionale et urbaine, Armand Colin, vol. 0(2), pages 355-388.
    17. repec:wyi:journl:002155 is not listed on IDEAS
    18. Galster, George C. & Osland, Liv, 2024. "Educational and gender heterogeneity of the rural-urban earnings premium: New evidence from Norway," Regional Science and Urban Economics, Elsevier, vol. 105(C).
    19. Di Addario, Sabrina & Patacchini, Eleonora, 2008. "Wages and the City. Evidence from Italy," Labour Economics, Elsevier, vol. 15(5), pages 1040-1061, October.
    20. Johan Larsson, 2014. "The neighborhood or the region? Reassessing the density–wage relationship using geocoded data," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(2), pages 367-384, March.
    21. Michaela Fuchs & Anja Rossen & Antje Weyh & Gabriele Wydra‐Somaggio, 2021. "Where do women earn more than men? Explaining regional differences in the gender pay gap," Journal of Regional Science, Wiley Blackwell, vol. 61(5), pages 1065-1086, November.

    More about this item

    Keywords

    wage differentials; metropolises; agglomeration externalities; multilevel modelling;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pes:ierequ:v:11:y:2016:i:4:p:853-869. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Adam P. Balcerzak (email available below). General contact details of provider: https://edirc.repec.org/data/ibgtopl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.