2004 Volume 13 Issue 1 Pages 51-69
Labor productivity of migrants to urban areas are higher than in rural. This makes it seem urban labor market to affects the productivity of migrants. Using large scale labor survey from Thailand over the period 1994-96, I examined the reason for the productivity difference with regard to learning effects that arise from experience in urban labor market.
A certain portion of the productivity difference is attributable to knowledge spillover from neighboring workers. Moreover, individual educational attainment is found to accelerate the magnitude of the spillover effect. Nevertheless, the contribution of the spillover effects becomes ignorable in magnitude when block fixed effect of the urban labor market is controlled. This implies that learning employment opportunities are more important in explaining the learning effects of urban labor market, rather than knowledge spillover.
In addition, self-selection bias due to migration decision to urban areas is slightly negative against the earnings of migrants, despite the higher level of human capital of migrants among the origin. This is partly due the return to human capital of migrants is less than in rural, because the migrants are if the process of job matching in the urban labor market.