2022/02/09 by Wolfgang Dauth, Sebastian Findeisen, Enrico Moretti +1 · 1 voice · 2 citations
Economics, Econometrics and Finance · #Regional Economics and Spatial Analysis #Labor market dynamics and wage inequality #Spatial and Panel Data Analysis
paper · pdf · doi:10.1093/jeea/jvac004
openalex created_date 2022/02/09 · openalex publication_date 2022/02/09 · openalex updated_date 2026/07/30
Abstract Using administrative German data, we show that large cities allow for a more efficient matching between workers and firms and this has important consequences for geographical inequality. Specifically, the match between high-quality workers and high-quality plants is significantly tighter in large cities relative to small cities. Wages in large cities are higher not only because of the higher worker quality but also because of a stronger assortative matching. Strong assortative matching in large cities magnifies wage differences caused by worker sorting, and is a key factor in explaining the growth of geographical wage disparities over the last three decades.