Education, experience, and urban wage premium

Abstract

Recent studies investigate the urban wage premium associated with education and work experience. We study the effect of work experience and firm tenure across education groups. All education groups benefit more from working in cities, and the extra city wage premium highly educated enjoy over less educated workers is increasing with city work experience. Interestingly, the city wage premium of less educated workers is increasing in firm tenure, while the highly educated gain more by shifting jobs between firms. The analysis is based on administrative registers covering all full time private sector workers in Norway, about 4.7 million worker-year observations.

Human capital sorting: The “when” and “who” of the sorting of educated workers to urban regions

“…They state: “workers in big and small cities are not particularly different to start with; it is largely working in cities of different sizes that makes their earnings diverge” (De la Roca & Puga, , p. 109). Carlsen, Rattsø, & Stokke, arrive at similar conclusions based on data on workers in Norway. They find that sorting has some effect, but only for workers with college degrees.…”

“…However, these higher wages are offset by higher costs of living, so that, in spatial equilibrium, workers are indifferent between regions (Glaeser, ). These higher wages are often found to take the form of a static (level) effect and a dynamic (growth) effect that accrues over time (Carlsen et al., ; Glaeser & Maré, ; Matano & Naticchioni, ).…”

“…De la Roca and Puga () find that workers in larger cities do not exhibit higher unobserved ability, as measured by individual fixed effects, but that highly able workers have higher returns to experience accumulated in cities. Carlsen et al., elaborate on this for Norway and distinguish between workers of different educational levels. They find that college‐educated workers have higher returns to city experience, but they also find evidence for sorting on unobservable characteristics among college‐educated workers and that differences in unobserved ability are more important for young workers.…”

The migration pathway to economic mobility: Does gender matter?

“…A few scholars argue that selection of initially more productive workers is insignificant in the larger picture, when industrial sector, age and urban experience are taken into account (Baum-Snow & Pavan, 2012;De La Roca & Puga, 2017). The dominating tendency, however, is to observe substantial sorting across central and less central labour markets (we cannot cite all the literature, but see Carlsen, Rattsø, & Stokke, 2016;Combes, Duranton, & Gobillon, 2008;Eeckhout, Pinheiro, & Schmidheiny, 2014;Korpi & Clark, 2019). There is also agreement that rural-urban migrants receive a combination of static and dynamic rewards, usually with larger dynamic premiums for highskilled individuals (Carlsen et al, 2016;Gordon, 2015).…”

Skill and Earnings in the Healthcare Sector: Evidence From Rustbelt and Sunbelt Cities

“…Learning continues well after college, and individuals may acquire additional skills in other environments. Carlsen et al () showed that age reflects job tenure from learning within the firm. Education: human capital theory maintains that human capital investment accumulates largely through schooling (Becker ). Schooling contributes to capital by acting as a substitute source of training for skill and apprenticeship.…”