This paper examines the size and sources of the urban wage premium in three African
countries—Nigeria, Tanzania, and Uganda— using panel data on workers for the
period 2009 to 2013. We ask three basic questions. First, is there any evidence that
an urban wage premium exists in Africa? Second, what role, if any, does spatial sorting
play in explaining this wage premium? And third, which demographic groups benefit
the most from agglomeration effects? Our findings present new evidence on the role
of cities in Africa. Specifically, we find strong evidence that an urban wage premium
exists and is not explained solely by the spatial sorting of more skilled workers into
African cities. However, there is considerable heterogeneity in who benefits from
agglomeration effects. We find evidence that the urban wage premium is largest for
workers in the primate city of each country and, in some cases, non-existent for
workers in secondary cities. In addition, the urban wage premium is only found to be
significant for male workers in all three countries studied.