Abstract
We derive a structural index for labor market density based on the Ellison-Glaeser index for industry concentration. The labor market density index serves as a proxy for the number of workers that are potentially available for jobs in a particular area. The index is based on observed home-work location patterns. It is particularly useful for testing theories where the scale of the market matters. We apply this index to a standard wage equation and find that it explains almost half of the cross-region wage variance.
Original language | English |
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Pages (from-to) | 901-908 |
Journal | Review of Economics and Statistics |
Volume | 85 |
Issue number | 4 |
DOIs | |
Publication status | Published - 2003 |