Agglomeration Economies and the Urban Wage Premium in Australia

Understanding the benefits of dense agglomerations is important for decisions on where to live and our understanding deep economic disadvantage. This paper first quantify impact urban density individual wages, referred as wage premium, in Australia. By combining Household Income Labour Dynamics Australia Survey microdata 13,112 employed individuals regional-level population data, effects hourly wages are studied over period 2001 2019. A unique feature this apply a flow-based clustering algorithm that uses commuting flows define spatial structures, which compared with Australian Statistical Geography Standard structures. The Ordinary Least Squares estimate premium peaks at 2.7 per cent. Controlling fixed effects, 1.6 evidence suggests increase by cent if local doubles.