Using administrative data for West Germany, this paper investigates whether part of the urban wage premium stems from fierce competition in thick labour markets. We first establish that employers possess less wage-setting power in denser markets. Local differences in wage-setting power predict 1.1-1.6% higher wages from a 100 log points increase in population density. We further document that the observed urban wage premium from such an increase drops by 1.1-1.4pp once conditioning on local search frictions. Our results therefore suggest that a substantial part of the urban wage premium roots in differential imperfections across local labour markets.

中文翻译：

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不完善劳动力市场中的城市工资溢价

使用西德的行政数据，本文调查了部分城市工资溢价是否源于密集劳动力市场的激烈竞争。我们首先确定雇主在密集的市场中拥有较少的工资设定权。工资设定权力的局部差异预测，人口密度每增加 100 个对数点，工资就会增加 1.1-1.6%。我们进一步证明，一旦以本地搜索摩擦为条件，观察到的城市工资溢价就会下降 1.1-1.4pp。因此，我们的结果表明，城市工资溢价的很大一部分源于当地劳动力市场的不完善程度。