Earnings are probable to rise with the size of urban area as firms in larger urban areas are more dynamic, allowing them to pay higher wages, and/or because the average skill level of workers-their human capital-is higher. It has long been argued that bigger cities offer firms with a prolific advantage that is not accessible to the same degree in smaller cities and rural areas. These agglomeration economies shoot from many sources, counting the better corresponding of worker skills with firm needs, access to shared infrastructure (e.g., airports) and knowledge that percolates more successfully between firms in close proximity to each other. In contrast to agglomeration economies, moderately little awareness has been paid to the function of human capital as a driver of urban-rural earnings differences.
