Women in the City: Agglomeration and the Gender Wage Gap

Marigee Bacolod, Naval Postgraduate School

This paper contributes to our understanding of gender wage gaps and the urban wage premium. First, the study documents a systematic pattern: gender wage gaps are systematically narrower in larger U.S. metropolitan areas. Skill agglomerations are then considered to explain the pattern. If men and women are endowed with heterogeneous skills, and these skills have differential productivities across city sizes, agglomerative forces may differentially reward men and women. This hypothesis is tested using occupational data on male and female workers' cognitive, interactive, and physical skills. Women are comparatively better endowed with interactive and cognitive skills, while men are comparatively better endowed in physical skills. Decomposing the wage gap shows agglomerative returns to skills account for majority of the observed gender gap. These estimates suggest that even as women are advantageously endowed with the skills rewarded in agglomerations, they benefit less from agglomerations than men, resulting in the observed gender gap.