The urban wage premium in imperfect labor markets

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Using administrative data for West Germany, we investigate whether part of the urban wage premium stems from greater competition in denser labor markets. We show that employers possess less wage-setting power in denser markets. We further document that an important part of the observed urban wage premia can be explained by greater competition in denser labor markets.

Original languageEnglish
JournalJournal of Human Resources
Issue numberSpecialIssue 1
Pages (from-to)S111-S136
Number of pages26
Publication statusPublished - 01.04.2022

Bibliographical note

Funding Information:
Boris Hirsch is Professor of Economics at Leuphana University of Lüneburg and an affiliate of the IWH and IZA. Elke J. Jahn is Professor of Economics at Bayreuth University, Distinguished Researcher at the Institute for Employment Research (IAB), and an affiliate of the IZA. Alan Manning is Professor of Economics at the London School of Economics and Director of the Community Programme at the Centre for Economic Performance at the LSE. Michael Oberfichtner is Researcher at the Institute for Employment Research (IAB). The authors thank William Boal, Michael Burda, Angus Deaton, Albrecht Glitz, Peter Haller, Dan Hamermesh, Klara Kaufmann, Peter Kuhn, Ismir Mulalic, Michael Pflüger, Claus Schnabel, Uta Schönberg, Jens Südekum, Gerard van den Berg, Rudolf Winter-Ebmer, Thomas Zwick, and two anonymous referees for very useful suggestions and further appreciate comments by participants of the EALE 2016, RES 2016, UEA 2015, VfS 2015, and WEAI 2017 conferences, the Industrial Relations Section, Princeton University, 2018 Monopsony Conference in Sundance, UT, the BGPE 2015 and DFG SPP 1764 workshops, as well as by seminar participants in Berlin, Cologne, Göttingen, Halle, Hamburg, Lüneburg, Mainz, Nuremberg, and Munich. This research was supported by the Fritz Thyssen Foundation. The authors use confidential administrative data that are not publicly available due to German data protection laws. Data access for replication is possible through the Research Data Centre of the Institute for Employment Research; see for further information. The authors are willing to assist (Michael Oberfichtner, michael.oberfichtner@

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