Building Bridges and Widening Gaps

Abstract By exploiting the opening of the Öresund Bridge between Denmark and Sweden, we examine the impact of access to larger labor markets on wages and employment. We show that the bridge generated a substantial increase in the cross-country commuting behavior of Swedes and a 13.5% increase in the average wage of workers in the region. We further show that the wage gains are unevenly distributed: the effect is largest for high-educated men and smallest for low-educated women. Thus, the wage gains come at the cost of increased income inequality and a widening of the gender wage gap, both within and across households.