Urbanization - productivity, distribution, and policy

The project has analyzed wage formation and wage differences using register data at the individual level along four dimensions - city/periphery, low/ high education, private/ public sector, and gender. The understanding is that the four dimensions work together and create different regional developments. The private sector wage level is much higher in cities, and this is to a large extent explained by selection - relatively more higheducated in cities. The public sector offers lower wage for higheducated than private sector, and this leads to a large private-public wage gap in cities. The wage gap is smaller in the periphery. Different wage development between men and women is first and for all related to lower return to work experience, in particular for loweducated. In the public sector the gender wage gap is smaller, and it is explained by observable characteristics of the workers. Further research has been directed towards migration and inequality. I an analysis exploiting data about job displacement the importance of moving is investigated for the adjustment of workers. It is shown that workers moving have a larger income loss than workers staying in the labor market region. The difference is to a large extent explained by family-related moves. Another analysis studies the difference between cognitive and non-cognitive skills for moves based on data from military enlistment (men). It is distinguished between 1adaptability' and 'cognitive skill', and both are shown to increase the probability of moving out of the labor market region., but only kognitive skills are important for the income gain of moving. In an analysis of inequality, the role of ocal governments have been studied. Local government services such as child care, primary school, and care for the elderly are concentrates to subgroups of the population and are important for their living contitions. It is shown that local government in-kind services have a large impact on measured inequality, in particular for low income groups and poverty. Recent analyses have been directed towards the importance of public investment in transport for regional development and methodological challenges in identifying wage differences between regions and sectors. Transport infrastructure influences economic and social interaction ? both goods transport for firms, commuting by workers and recreation travel of inhabitants. A structural model of the three types of transport is developed and the importance for welfare and productivity derived. In particular the relationship between individual travel and firm productivity and the utility effect of recreational travel are innovations compared to the existing literature. The model is applied to evaluate two transport infrastructure projects, the polarsirkelen airport and the rogfast road tunnel project. In analyses of wage structure and inequality between regions and sectors the selection problem is serious. The individuals we study choose where to live and what sector to work in and the observed wages consequently reflects unobserved characteristics of the individuals. In the recent literature the selection problem has been addressed using panel data and identifying effects based on individuals shifting region and sector. Wage gaps are described by differences between such shifters and those staying in their regions and sectors. In an analysis we suggest an improvement of this approach by exploiting a long time eriod where we can separate between early and late shifters ? early shifters can be compared with stayers that will shift later. Shifters are compared to shifters instead of stayers, and the analysis shows that we can eliminate bias in the estimated effect by about 20% using this method. Public sector wages influence the geographic variation of income inequality. Our starting point is the stylised fact that college and postgraduate premiums in the private sector are higher in cities. The wage distribution in the public sector is different. The conventional understanding is that the public sector has relative wage compression and thereby contributes to wage equality. We find equal selection-adjusted college wage premiums in the private and public sectors, but the postgraduate wage premium is larger in the private sector. However, the aggregate results hide geographical differences. In cities, college and postgraduate wage premiums are higher in the private than the public sector, while in the rest of the country, these wage premiums are relatively higher in the public sector. It follows that public sector contributes to higher inequality outside cities.

Prosjektet er empirisk grunnforskning. Prosjektet har vært rettet mot internasjonalisering og deltagere har fått kompetansebygging gjennom internasjonal publisering og samarbeid. Prosjektet bidrar internasjonalt med nye forskningsresultater som kan utnyttes og videreutvikles i det internasjonale forskningssystem. Prosjektet bidrar med kunnskap som kan ha stor samfunnsmessig betydning, som geografisk variasjon i produktivitet, dynamiske regionale effekter knyttet avkastning av arbeidserfaring, utdanningens betydning for produktivitet, kommunalt tjenestetilbud integrert i mål på inntektsulikhet, kjønnsdelt arbeidsmarked, geografisk variasjon i livskvalitet, sammenheng mellom offentlig og privat lønnsdannelse, evaluering av veksteffekter av infrastruktur, og skattesystemets regionale effekter. Slike bidrag til kunnskap vil over tid legge grunnlag for informasjonsgrunnlaget som kan utnyttes i handlingsvalgene til individer, bedrifter, forvaltningsorganer og politiske institusjoner.

We propose a research project on urbanization and regional growth oriented towards productivity and distributional aspects. The main objective is to understand the underlying mechanisms of agglomeration effects related to labor matching and learning and their implications for income distribution. Given the understanding of adjustment processes, we will pursue the role of the public sector and policy in influencing urbanization and regional growth. Most of the recent research in this area has been based on aggregate regional income and socio-economic data. We suggest a new analysis of the heterogeneity of regional development based on micro data using administrative registers covering the whole population since 1967. This micro data allows for analysis of the heterogeneous individual decisions about migration, education, and job market participation. The literature faces serious methodological challenges related to the endogeneity of these decisions as well as the selection of people into urban centers or regions with high economic activity, and the interaction of endogenous processes determining the regional development. We will apply a series of approaches in an attempt to identify the causal relationships behind the observed development. The combination of the high-quality administrative register data, methodological challenges, and necessity of reanalysis of old research presents the opportunity for high-level international publication of the results.