Dependence of wage inequality on spatial clustering of economic complexity in the Metropolitan Region of Amsterdam

Abstract

Recent research efforts have examined economic complexity as a determining factor for economic growth and a reducer of inequality. That relation is not universal, however, as highly complex economic activities seemingly only increase growth and wages for a select few higher educated, high-skilled workers. That may in turn lead to divergent growth, where workers employed in low-complexity activities are left behind, increasing inequalities. In cities and urban areas, where there is a concentrated mix of workers in low- and high-complexity activities, that effect is prominent. This research examines the spatial relation between complexity of economic activities and wage inequality in the Metropolitan Region of Amsterdam (MRA). An analysis of employment microdata is performed, combining methods of economic complexity indexation and spatial econometrics. While spatial clustering within the MRA of both economic complexity and wage inequality is established, there is no clear evidence for the spatial dependence of the relation between the two.