The estimation of urban premium wage using propensity score analysis: some considerations from the spatial perspective

This paper estimates the Urban Wage Premium for the Chilean case, but proposing three contributions to the literature. First, the geographical space is reconfigured using functional regions instead administrative regions. This process is carried out using techniques from the spatial econometric literature. Second, we exploit the use of micro data. We estimate the wage equation using a survey at individual level that avoids problems associated with regional aggregated specifications. Finally, we set the comparability among observations using matching comparison. Thus, we isolate the urban effect from other alternative sources. Our results suggest a Urban Wage Premium between 4 and 21%.