The Effects of Agglomeration on Wages: Evidence from Russia

This master dissertation shows the theoretical and practical aspects of the effects of agglomeration and their impact on wages. In the first chapter, the concepts of agglomeration and agglomeration effect are considered, a classification of agglomeration effects is given, the theoretical aspects of the features of the development of agglomeration in Russia are considered. The second chapter contains a review of empirical literature on selected topic, the data and methodology used by the authors in achieving their goals, as well as formulas and conclusions, which are reflected in the authors' works. The third chapter of the work is devoted to the research methodology, this chapter discusses the most common tools for assessing agglomeration effects and selected those that are suitable for us to measure them based on the available data. The fourth chapter provides descriptive statistics of variables that are included in the specification for assessing agglomeration effects. The fifth chapter is devoted to models based on the selected specification, the rationale for choosing the best of them, as well as estimates and conclusions are drawn from the results of measuring the effect of agglomeration effects on real wages. The first key feature of this work is the point, that there was made an attempt to evaluate all classified effects of agglomeration according to A. Marshall's classification (effect of urbanization, clustering and diversification). The objects to research are cities, not a regions , and it is the second key feature. The relevance of this work is due to the Spatial Development Strategy adopted by the government. Since the controversy around it does not subside to this day, this work can say its word in favor of this strategy. Keywords: agglomeration, agglomeration effect, clustering, urbanization, diversification, panel data.