Urban wage premium for women: evidence across the wage distribution

Abstract

The urban wage premium (UWP), that is, the phenomenon of higher wages in denser areas, is rarely separately estimated for men and women. Yet, men and women behave differently in the labor market. This study sought to uncover whether (i) agglomeration economies in dense areas of Brazil differently benefit men and women; (ii) the female and male UWPs change across the wage distribution, and (iii) whether the male and female UWPs differ across formal and informal jobs. We do so using Brazil’s National Continuous Household Sample Survey (PNADC/IBGE) gathered between 2012 and 2019. We found that the female UWP is on average 11.3%, almost double the average male UWP of 5.7%. We also found that the female UWP was higher in formal and informal jobs and across various agglomeration levels. Quantile regressions show that the magnitudes of and gender differences in the UWP increase with wages. Studies that exclude women may thus underestimate the UWP, especially for high-paying jobs. The average UWP hides important heterogeneity that exists across the wage distribution and formality status.