Abstract
As cities increase in size, total wages grow superlinearly, meaning that average wages are higher in larger cities. This phenomenon, known as the urban wage premium, supports the notion that urbanization and the growth of cities contribute positively to human well-being. However, it remains unclear how the distribution of wages changes as cities grow. Here we segment the populations of U.S. cities into wage deciles and determine the scaling coefficient of each decile’s aggregate wages versus city size. We find that, while total wages of all deciles grow superlinearly with city size, the effect is uneven, with total wages of the highest wage earners growing faster than all other deciles. We show that this corresponds with the predominance of high-wage jobs in larger cities. Thus, the effects of urbanization are mixed -- it is associated with higher average wages but with increasing inequality, thus inhibiting prospects for long-term sustainability.
Highlights
Urban scholars have long known that workers in larger cities earn higher average wages than workers in smaller cities, a phenomenon known as the urban wage premium[1,2]
While studies have shown that inequality of wages, incomes, and other indicators of prosperity exists between cities of different sizes[5,15,23,24,25], we seek to understand how inequality within cities varies as a function of city size
In all years studied the wage premium for the tenth decile of wage earners is significantly higher than any other decile and decreases monotonically across deciles
Summary
Urban scholars have long known that workers in larger cities earn higher average wages than workers in smaller cities, a phenomenon known as the urban wage premium[1,2]. Researchers have shown that both wages and incomes increase superlinearly as a power function of population size[5,6,7,8,9], meaning that average incomes and wages are higher in larger cities Findings such as these have contributed to the view that urbanization can be a positive contributor to human well-being[10,11,12]. In both human and natural systems, inequality of resource distribution is known to increase with time and development[13,14] suggesting that while larger cities may bring higher average wages, they may exhibit higher levels of inequality. We do this by examining how the distribution of wages within cities changes with size
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