City Size And Wage Premium

Since the 21 st century,more and more Chinese are heading for big cities.Why do most workers prefer to go to big cities instead of staying in small cities? This problem can be attributed to a higher wage in big cities.In 2015,the average wage of urban workers in Beijing is 61570 higher than that of Yingkou,this wage gap can be summed up as the “wage premium.” In theory,there are three hypotheses that can explain the wage premium: agglomeration promotes labor productivity through various mechanisms,so the labor force can obtain relatively high income in big cities;The higher wages are returns to high skilled workers in big cities;Big cities compensate workers for higher wages due to higher living cost.Regarding research on wage premiums,domestic scholars usually pay attention to all workers,migrant worke rs,and college students.There is a rare study that focuses on company executives.In recent years,the higher wages of senior executives have attracted widespread attention and caused fierce controversy.Therefore,the problem of rising salaries of senio r executives is not only an important topic for academic researc h,but also one of the key point in policy.Based on the foundation and background mentioned above,th is dissertation first adds city size and living cost variables in the Mincer equation,sel ects the listed company executives as high-skilled labors,and uses the urban employees as a reference.The empirical results show that the expansion of the city size has significantly promoted the salary level of executives,and the benefits of executive form agglomeration are significantly higher than the ordinary labor force.In addition,we find that in the short-term,senior executives benefit from urban agglomeration to a higher level than the average labor force,but in the long run this situation is reversed.Based on the analyses on agglomeration and income,we further investigate the sources of high-level executive wage in big cities after controlling the personal characteristics and corporate governance factors,and we find that executives gain a wage premium by exchanging and imitating to accumulate human capital in big cities.