Paper by Prof Skorobogatov: Newer Cities Promise Higher Wages in Russia
Why do newer cities promise higher wages in Russia. The paper by professor Alexander Skorobogatov gives the clue in the Journal of Urban Economics
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Why Do Newer Cities Promise Higher Wages in Russia? Professor A. Skorobogatov, HSE University St Petersburg
This paper documents the negative relationship between the age of cities and their average wages in Russia and a number of post-Soviet countries. To determine a mechanism behind this relationship, a spatial equilibrium model was developed. The empirical strategy is reduced to using the model to guide the interpretation of regression estimates.
According to the results, higher real wages in newer cities reflect both their disadvantages as places for living and their production advantages. The latter are related to their production and construction amenities, higher shares of skilled workers, and more available natural resources. At the same time, these advantages and disadvantages tend to disappear over time, which gives rise to income convergence.