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A Test of the Worker Quality Explanation for the Urban/Non-Urban Wage Gap
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- Authors
- Issue Date
- 2010-10
- Citation
- Seoul Journal of Economics, Vol.23 No.4, pp. 421-437
- Abstract
- We conduct a test to determine whether the observed urban/nonurban
wage gap is a return to unobservable ability. A new measure
of worker quality is added to wage regressions, and the estimated
urban premium is compared with the results from the standard
human capital measures. This new measure of unobserved ability
refers to workers literacy as assessed by the International Adult
Literacy Survey (IALS). Using data from three countries with different
population densities and scope of human capital spillovers, we
find that controlling for literacy levels does not reduce the size of
the urban wage premium, implying that the wage gap is not due to
previously unobserved worker quality. We also test whether literacy
affects interaction between the urban wage premium and experience,
which may proxy for learning-by-doing, and find similarly insignificant
changes in the estimates.
- ISSN
- 1225-0279
- Language
- English
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