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February 07, 2011

Larger city have a higher wage gap with the critical mass to support key technologies and industries

A University o Rochester study shows that overall up to one-third of the growth in the wage gap between the rich and the poor is driven by city size independent of workers' skills

The larger the city, the wider the wage gap among its workers. In other words, the country's largest cities, New York, Los Angeles and Chicago, are home to the greatest extremes in incomes, while midsized cities experience relatively less wage inequality and rural areas the least. Larger metropolitan areas, more so than their smaller counterparts or rural areas, have experienced rapid growth in wages within all skill levels.



Bigger cities have created "agglomeration" economies that have augmented productivity in dramatic ways, making workers more valuable and therefore able to command higher pay. People with higher end skills are able to have a larger increase their productivity in larger cities.

Populous regions have been able to support advanced technologies and industries that would be impractical or impossible in smaller communities and rural areas and workers have more opportunities to learn advanced skills and are exposed to innovation more rapidly. As financial centers, larger cities also have easier and cheaper access to capital for bankrolling new ventures.

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