Immigrants and the Benefits of Urban Experience

This paper studies the static and dynamic determinants of the urban wage premium for natives and immigrants. Using a panel of the full working population in Denmark for the years 1987–2016, we show that urban experience is rewarded more in wages than rural experience. Splitting our sample into natives, western immigrants, and non-western immigrants, we show that non-western immigrants do not benefit from the urban experience premium unless they move to a rural area. We interpret these results as evidence that non-western immigrants are strongly tied to cities through non-wage amenities such as the network of co-ethnics.