IDEAS home Printed from https://ideas.repec.org/p/osf/socarx/24cvs.html
   My bibliography  Save this paper

Black and Latinx Workers Reap Lower Rewards than White Workers from Careers in Big Prosperous Cities

Author

Listed:
  • Buchholz, Maximilian
  • Storper, Michael

Abstract

The large labor markets of big prosperous cities offer greater possibilities for workers to gain skills and experience through successively better employment opportunities. This "experience effect" contributes to the higher average wages that are found in big urban areas compared to the economy as a whole. Racial wage inequality is also higher in bigger cities than in the economy on average. We offer an explanation for this pattern, demonstrating that there is substantial racial inequality in the economic returns to work experience acquired in big cities. Using data from the National Longitudinal Survey of Youth, 1979 we find that each year of big city work experience is worth about one quarter to half as much for Black and Latinx workers as it is for White workers, in terms of hourly wages. One-third of this inequality can be explained by racial disparities in the benefits of high-skill work experience. This research identifies a heretofore unknown source of inequality that is distinctly urban in nature, and expands our knowledge of the challenges to reaching inter-racial wage equality.

Suggested Citation

  • Buchholz, Maximilian & Storper, Michael, 2024. "Black and Latinx Workers Reap Lower Rewards than White Workers from Careers in Big Prosperous Cities," SocArXiv 24cvs, Center for Open Science.
  • Handle: RePEc:osf:socarx:24cvs
    DOI: 10.31219/osf.io/24cvs
    as

    Download full text from publisher

    File URL: https://osf.io/download/6647f1af7250fa01fa4e7c97/
    Download Restriction: no

    File URL: https://libkey.io/10.31219/osf.io/24cvs?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. David H. Autor, 2019. "Work of the Past, Work of the Future," AEA Papers and Proceedings, American Economic Association, vol. 109, pages 1-32, May.
    2. Richard Wright & Mark Ellis & Matthew Townley, 2017. "The Matching of STEM Degree Holders with STEM Occupations in Large Metropolitan Labor Markets in the United States," Economic Geography, Taylor & Francis Journals, vol. 93(2), pages 185-201, March.
    3. Jorge De La Roca & Diego Puga, 2017. "Learning by Working in Big Cities," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(1), pages 106-142.
    4. Nathaniel Baum-Snow & Ronni Pavan, 2012. "Understanding the City Size Wage Gap," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(1), pages 88-127.
    5. Ananat, Elizabeth & Shihe, Fu & Ross, Stephen L., 2018. "Race-specific urban wage premia and the black-white wage gap," Journal of Urban Economics, Elsevier, vol. 108(C), pages 141-153.
    6. Wheeler, Christopher H., 2006. "Cities and the growth of wages among young workers: Evidence from the NLSY," Journal of Urban Economics, Elsevier, vol. 60(2), pages 162-184, September.
    7. Raj Chetty & Nathaniel Hendren & Patrick Kline & Emmanuel Saez, 2014. "Where is the land of Opportunity? The Geography of Intergenerational Mobility in the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(4), pages 1553-1623.
    8. Tom Kemeny & Michael Storper, 2024. "The Changing Shape of Spatial Income Disparities in the United States," Economic Geography, Taylor & Francis Journals, vol. 100(1), pages 1-30, January.
    9. 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.
    10. Nathaniel Baum-Snow & Matthew Freedman & Ronni Pavan, 2018. "Why Has Urban Inequality Increased?," American Economic Journal: Applied Economics, American Economic Association, vol. 10(4), pages 1-42, October.
    11. Ellora Derenoncourt, 2022. "Can You Move to Opportunity? Evidence from the Great Migration," American Economic Review, American Economic Association, vol. 112(2), pages 369-408, February.
    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. Bathelt, Harald & Buchholz, Maximilian & Storper, Michael, 2024. "The nature, causes, and consequences of inter-regional inequality," LSE Research Online Documents on Economics 123014, London School of Economics and Political Science, LSE Library.
    2. Kemeny, Thomas & Storper, Michael, 2020. "Superstar cities and left-behind places: disruptive innovation, labor demand, and interregional inequality," LSE Research Online Documents on Economics 103312, London School of Economics and Political Science, LSE Library.
    3. D'Costa, Sabine, 2024. "Re-evaluating the urban wage premium: The changing roles of geographical and job transitions for women and men," Regional Science and Urban Economics, Elsevier, vol. 108(C).
    4. Harald Bathelt & Maximilian Buchholz & Michael Storper, 2024. "The nature, causes, and consequences of inter-regional inequality," Journal of Economic Geography, Oxford University Press, vol. 24(3), pages 353-374.
    5. Liqun Pan & Pundarik Mukhopadhaya & Jing Li, 2016. "City Size and Wage Disparity in Segmented Labour Market in China," Australian Economic Papers, Wiley Blackwell, vol. 55(2), pages 128-148, June.
    6. Raoul van Maarseveen, 2020. "The urban rural-education gap: do cities indeed make us smarter?," CPB Discussion Paper 412.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    7. Raoul van Maarseveen, 2021. "The urban–rural education gap: do cities indeed make us smarter? [Educational investment responses to economic opportunity: evidence from Indian road construction]," Journal of Economic Geography, Oxford University Press, vol. 21(5), pages 683-714.
    8. 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).
    9. Raoul van Maarseveen, 2020. "The urban rural-education gap: do cities indeed make us smarter?," CPB Discussion Paper 412, CPB Netherlands Bureau for Economic Policy Analysis.
    10. Andrés Rodríguez-Pose & Michael Storper, 2020. "Housing, urban growth and inequalities: The limits to deregulation and upzoning in reducing economic and spatial inequality," Urban Studies, Urban Studies Journal Limited, vol. 57(2), pages 223-248, February.
    11. 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.
    12. Koster, Hans R.A. & Ozgen, Ceren, 2021. "Cities and tasks," Journal of Urban Economics, Elsevier, vol. 126(C).
    13. Bauluz, Luis & Bukowski, Pawel & Fransham, Mark & Lee, Annie Seong & López Forero, Margarita & Novokmet, Filip & Breau, Sébastien & Lee, Neil & Malgouyres, Clément & Schularick, Moritz & Verdugo, Greg, 2023. "Spatial wage inequality in North America and Western Europe: changes between and within local labour markets 1975-2019," LSE Research Online Documents on Economics 121290, London School of Economics and Political Science, LSE Library.
    14. 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.
    15. 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.
    16. Eckert, Fabian & Hejlesen, Mads & Walsh, Conor, 2022. "The return to big-city experience: Evidence from refugees in Denmark," Journal of Urban Economics, Elsevier, vol. 130(C).
    17. Patrick Bennett & Aline Butikofer & Kjell G. Salvanes & Darina Steskal, 2022. "Changes in Urban Wages, Jobs, and Workers from 1958-2017," Working Papers 202214, University of Liverpool, Department of Economics.
    18. Niebuhr, Annekatrin, 2016. "Benefits of dense labour markets - Evidence from transitions to employment in Germany," VfS Annual Conference 2016 (Augsburg): Demographic Change 145715, Verein für Socialpolitik / German Economic Association.
    19. Martin Henning & Orsa Kekezi, 2023. "Upward job mobility in local economies," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 16(3), pages 431-444.
    20. Benoît Schmutz & Modibo Sidibé, 2021. "Search and Zipf: A model of Frictional Spatial Equilibrium," Working Papers 2021-01, Center for Research in Economics and Statistics.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:osf:socarx:24cvs. 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: OSF (email available below). General contact details of provider: https://arabixiv.org .

    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.