Abstract
Individual wage growth is higher in more densely populated regions. Using data on detailed labour market biographies from Germany, this paper shows that job mobility contributes to this urban premium in wage growth. In urban regions, wage growth is higher both within jobs and between jobs. The higher between-job wage growth is driven by a combination of higher frequency of job changes and a higher payoff of moving between jobs. This finding is consistent with better coordination in denser labour markets. Further evidence shows that the gain from higher urban wage growth is not lost upon moving across regions, suggesting that a better job match results in higher human capital accumulation.
Lüttge, Julius