This must be the place: local amenities and superstars’ wages

Abstract

AbstractWe investigate the role of local amenities in shaping compensating wage differentials in labor market populated by high-skilled workers. Using 10 years of longitudinal data on workers productivity along with information on firms and location amenities, we evaluate whether workers are willing to pay to join a better firm and if firms with undesirable attributes must provide higher wages to attract workers. By accounting for unobserved workers heterogeneity, we show that superstars receive positive wage differentials for lower location amenities as well as riskier employments.