79

The aim of this paper is to study the impact of local amenities on urban wages in Greece. It breaks through the previous recent dichotomous approaches on urban wage premium, according to which, salary differentials are due either to productivity effects or to the heterogeneity of the labor market. The econometric work is based upon Gabriel and Rosenthal’s model in order to show that by omitting specific cities’ effects such as local amenities and local cost of living, some important information on the labor force characteristics such as gender, age, tenure and education may be biased. Among the paper’s results, one should note the fact that the urban wage premium seems stronger within the small and medium size firms rather than the larger firms.