Working Paper: CEPR ID: DP14287
Authors: Katrine Løken; Aline Butikofer; Alexander Willén
Abstract: We exploit the construction of the Oresund bridge, which connects a medium-sized city in Sweden to the capital of Denmark, to study the labor market effects of gaining access to a larger labor market. Using unique cross-country matched registry data that allow us to follow individuals across the border, we find that the bridge led to a substantial increase in cross-country commuting among Swedish residents. This effect is driven both by extensive and intensive margin employment responses, and translates into a 15% increase in the average wage of Swedish residents. However, the wage effects are unevenly distributed: the effect is largest for high-educated men and smallest for low-educated women. Thus, the wage gains come at the cost of increased income inequality and a widening of the gender wage gap, both within- and across-households. We show that these inequality effects are driven not only by differences in the propensity to commute, but also by educational specialization.
Keywords: Labor market expansions; wages; equity concerns
JEL Codes: J3; J62
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Opening of the Oresund Bridge (F43) | Increase in cross-border commuting among Swedish residents (J69) |
| Opening of the Oresund Bridge (F43) | Increase in average wage of Malmo residents (J39) |
| Increase in cross-border commuting among Swedish residents (J69) | Increase in average wage of Malmo residents (J39) |
| Opening of the Oresund Bridge (F43) | Increase in income inequality (D31) |
| Opening of the Oresund Bridge (F43) | Widening gender wage gap (J79) |