Agglomeration Effects of Immigrants and Natives: Heterogeneity Across Country of Birth, Migration Motives, and Skill Level

Abstract

I investigate the urban wage premium across groups of individuals based on country ofbirth, reason for immigration, and skill level. The findings add to the scarce literatureon the agglomeration effects of immigrants. Using rich administrative data for Norwayfrom 2008-2019 with information on labor participation back to 1993, I find that bothimmigrants and natives have an additional return from working in larger economic regionsover working in the periphery. However, the results suggest that immigrants from low- andhigh-income countries have a lower premium than natives. Using predicted worker fixedeffects as a measure of skill, I find that high-skilled individuals have a higher urban wagepremium compared to low-skilled individuals. Further, migrant workers have a significantlyhigher urban premium compared to refugees and family reunification migrants. Lastly,second-generation immigrants have static urban premiums similar to that of natives, withdynamic premiums resembling their parents’.

Keywords: Agglomeration Effects, Immigrants, Worker Fixed Effects, Skill Level, Second-Generation Immigrants, Migration Motives