Regional Wage Differences and Agglomeration Externalities: Micro Evidence from Thai Manufacturing Workers

The large and persistent wage gap between the Bangkok Metropolitan Region its peripheries remains a major concern for policymakers civil society. Theoretically, these regional disparities exist due to differences in workforce skills local characteristics of regions. This study empirically investigates sources spatial disparity Thailand using data sets from Labor Force Survey, Industrial Census, geospatial data, satellite imagery years 2007, 2012, 2017. two-stage estimation method was applied, soil clay content used as instrumental variable correcting endogeneity bias omission. results show that workers’ education experience affect differential. Other than individual skills, workers also benefited agglomeration externalities cities. Specifically, effect on wages found be statistically significant. To overcome paradox low urbanization rate high urban primacy Thailand, this suggests establishment multiple cities create externalities.