The Economist has a nice graph and article on the urban wage premium based on David Autor’s work. The graphs shown that in the past both college and non-college educated workers earned higher wages in more densely populated areas but today only college-educated workers experience an urban wage-premium.
Housing costs eat a large share of the college wage-premium so even college educated workers are not as better off in cities as the graphs make it appear. Autor’s point, however, is that wages for the non-college educated aren’t higher in cities so they might not move to cities even with lower housing costs. That could be true but I also suspect that the urban wage premium for the non-college educated is endogenous–firms employing these workers have moved out of the city but could move back in with lower housing and land costs.