Wage Discrimination and Place of Residence

This article tests the hypothesis of wage discrimination generated by the place of residence. Furthermore, four alternative explanations for the correlation between wages and place of residence are tested. The econometric results are robust to both a large set of explanatory variables and different econometric specifications. The instrumental variable and the 3 Stages Least Squares approach are used to correct both the endogeneity of the place of residence and the omission of the variable ability (ability bias). After all, the results suggest expressive wage punishment against workers that lived in poor areas