Is There an Urban Inclusivity Premium? Gender Wage Gaps Across Brazil's Urban Hierarchy

ABSTRACT This paper examines how gender wage inequality varies across the urban hierarchy and whether more central and diversified labor markets are associated with smaller female wage penalties, a pattern we define as the Urban Inclusivity Premium. Using matched employer–employee microdata from Brazil, we estimate Mincerian wage equations and Oaxaca–Blinder decompositions across urban‐hierarchy and employment categories. Controlling for worker, job, firm, sectoral and regional characteristics, we document a conditional female wage penalty of approximately 20%. Nationally, the observed gender wage gap is primarily driven by the unexplained component, while women's observable characteristics partially offset it. Spatial variation, however, is driven mainly by the explained component: the unexplained component remains broadly stable at around 0.20 log points, whereas women's observable endowments offset a larger share of it in higher‐order urban labor markets, contributing to smaller observed gaps. Rural markets show the same broad pattern, but with a less monotonic gradient. Robustness and sensitivity checks addressing sample composition, spatial sorting, and selection into formal employment confirm the stability of the female wage penalty and the broad spatial pattern. The findings highlight the role of urban structure and local labor‐market conditions in shaping gender wage inequality, suggesting that regionally differentiated, gender‐sensitive policies should account for territorial heterogeneity.