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Coen N. Teulings
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Publisher: Journals Gateway
The Review of Economics and Statistics (2003) 85 (4): 901–908.
Published: 01 November 2003
Abstract
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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.