We offer causal evidence of higher returns to experience in big cities. Exploiting a natural experiment that settled refugees across labor markets in Denmark between 1986 and 1998, we find that refugees initially earn similar wages across locations. However, those placed in Copenhagen exhibit 35% faster wage growth with each additional year of experience. Faster sorting of workers towards the type of establishments, occupations, and industries typically found in cities accounts for the vast majority of this urban wage growth premium.
This paper circulated under a former title prior to March 2020, "The Return to Big City Experience: Evidence from Danish Refugees."
Published in: _Journal of Urban Economics_ (Vol. 130, article 103454, July 2022) https://doi.org/10.1016/j.jue.2022.103454.