Cities, Wages, and the Urban Hierarchy

In this paper, we estimate the size of the wage premium necessary to compensate for remoteness incurred by workers compared to the city size productivity effects. We construct five urban hierarchy tiers for cities in Chile based on their level of remoteness from the urban system. We then contrast the effect generated by these variables on worker wages. We report a positive gradient of wages the higher the size of the urban tier and a loss in wages that can reach 35 percent for more remote cities.