Convergence of Productivity: An Analysis of the Catch-up Hypothesis within a Panel of States

This article analyzes the female rural-urban wage gap in Canada using longitudinal data from the Survey of Labour and Income Dynamics 199396. We estimate a two-step wage equation accounting for unobserved heterogeneity and sample selection. The results indicate that a statistically and economically significant rural-urban wage gap remains after controlling for observed and unobserved characteristics. Further, the results suggest this rural-urban wage difference is not simply induced by immobility between rural and urban markets. Rather, consistent with the effect of thinner rural labor markets, the evidence indicates that rural-urban differences in the impact of a number of explanatory variables are significant.