Title: Spatial Wage Disparities – Workers, Firms, and Assortative Matching

Speaker: Jens Suedekum, DICE, Heinrich-Heine-University Düsseldorf

Time: June 6th, 2017 13:30–15:00

Venue: Conference Room 106B, Zhonghui Building (College of Economics, JNU)

About the speaker:

Jens Suedekum is a Professor of International Economics at the Duesseldorf Institute for Competition Economics (DICE) at Heinrich-Heine-University Düsseldorf. He is also a Research Fellow of CEPR, Institute for Emplyoment Research (IAB), CESifo Research Network, and a former Council Member of the Urban Economics Association (UEA). Jens Suedekum is a Co-Editor of the Journal of Regional Science, and a Member of the Editorial Board at the Journal of Urban Economics and Regional Science and Urban Economics. His main research areas are urban and regional economics and international trade. Current research focuses on the impact of international trade on local labor markets, regional migration, city size distributions, and related topics. He has published widely in international peer-review journals such as the American Economic Review, Journal of the European Economic Association, International Economic Review, European Economic Review, Journal of International Economics, Journal of Public Economics, Journal of Urban Economics, and many others. 

Abstract: 

Is spatial wage inequality in Germany driven by worker effects, by firm effects, or by stronger assortative matching? Using rich administrative data, we decompose the wage structure into person- and establishment-effects over the 1990-2010 period. 

This allows us to decompose the variation of wages across space, and the evolution of spatial wage inequality over time. We find that better worker-firm matching in denser local labour markets is a key mechanism behind rising between-city inequality.

This holds for aggregate local labour markets, and even more so within narrowly defined occupation- and industry-specific market segments. Quantitatively, matching adds more to the understanding of the observed trend in spatial wage inequality than all firm-based explanations, and almost as much as all worker-based sources of higher urban wages taken together.