Determinants of hourly wages inequality in selected european metropolises. The results from the multilevel modelling

Abstract

The aim of this paper is the identification of the hourly wages heterogeneity in the sample of individuals living in 35 European metropolitan areas. Addi-tionally, we evaluated factors which determine spatial variability. For this pur-pose, we applied Mincer-type multilevel models for the micro data from the European Social Survey (2010). To delimit metropolitan areas we used Urban Audit’s Larger Urban Zones. Our results suggest the greatest impact of cross-country differences in explaining metropolitan variation of wages. We confirmed the gen-der pay gap equal to 10-11%, the wage premium from permanent contracts (7-10%) and being responsible for supervising other workers (16%). The importance of workers and firms characteristics was proved both for individual-level and met-ro-level differences. It might suggests the part of inequalities between metropolises is connected with different composition of workers’ skills in each metropolis and spatial sorting. Finally, we found that unexplained (by such attributes) proportion of variability across metropolises might be the result of agglomeration effects. The positive impact of Jacobs externalities was found, while we did not confirm the existence of Marshall externalities.