Presentation at the annual meeting of the European Economic Association in Rotterdam

Together with Annekatrin Niebuhr (Institute for Employment Research, Kiel University), Jan Cornelius Peters is researching the causes of regional wage differences between rural and urban labor markets. Jan Cornelius Peters presented their current paper "Accumulating valuable work experience: the importance of large firms and big cities" at this year's congress of the European Economic Association.

In the paper presented, the authors take up the observation that differences in regional average wages are partly due to the fact that workers in small rural labor markets experience slower wage growth with increasing work experience than workers in large urban labor markets. This is attributed in the literature to the fact that in rural areas there are disadvantages in terms of gaining valuable work experience. These disadvantages have an unfavorable effect on individual productivity and wage development, as work experience is an important determinant of productivity and wage growth in the course of employment.

Jan Cornelius Peters and Annekatrin Niebuhr show that wage growth over the course of a working life depends not only on the size of the labor market in which the experience is gained, but also on the size of the establishment in which a person is employed. This partly explains why wages of workers in rural areas grow more slowly than wages of workers in urban areas. In rural areas, workers often work in smaller firms than those in urban labor markets.

In addition, the author shows that workers in small rural labor markets are less likely to change firms, which presumably means that workers there are less likely to meet new colleagues with different knowledge and/or skills from whom they could learn. Furthermore, establishments in smaller rural labor markets are less likely to offer their employees further training. This is related to a smaller plant size in rural areas, but also to other characteristics of the establishments, and also reduces the opportunities to gain new knowledge that could have a positive impact on productivity and wages.

Link to the presented working paper (as of January 2024): https://doi.org/10.2139/ssrn.4698829

The study is being conducted as part of the cooperation project Economic effects of the spatially uneven distribution of workers as well as firms.

Contact: Dr. Jan Cornelius Peters