The Annals of Regional Science

, Volume 43, Issue 1, pp 71–88 | Cite as

Regional price levels and the agglomeration wage differential in western Germany

  • Uwe BlienEmail author
  • Hermann Gartner
  • Heiko Stüber
  • Katja Wolf
Special Issue Paper


We analyse whether wage differences between cities and rural areas in western Germany are due to unobserved differences in regional price levels. Since regional prices are available for only 10% of the regions we use multiple imputation to generate prices for all regions. Our results show that the nominal agglomeration wage differential is 25%, whereas the real differential is 19%. If we control for the composition of the labour force and jobs, the real wage differential is 4%. If we additionally control for differences in regional building land prices the agglomeration wage differential vanishes.

JEL Classification

C15 J31 R23 


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Copyright information

© Springer-Verlag 2008

Authors and Affiliations

  • Uwe Blien
    • 1
    Email author
  • Hermann Gartner
    • 1
  • Heiko Stüber
    • 1
  • Katja Wolf
    • 1
  1. 1.Institute for Employment Research (IAB)NurembergGermany

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