Spatial Sorting

2014/06/01 by Jan Eeckhout, Roberto Pinheiro, Kurt Schmidheiny · 13 citations
Economics, Econometrics and Finance · #Regional Economics and Spatial Analysis #Housing Market and Economics #Fiscal Policy and Economic Growth

paper · doi:10.1086/676141

Abstract

We investigate the role of skill complementarities in production and mobility across cities. The nature of the complementarities determines the equilibrium skill distribution across cities. With extreme-skill complementarity, the skill distribution has thicker tails in large cities; with top-skill complementarity, there is first-order stochastic dominance. Using wage and housing price data, we find robust evidence of thick tails in large cities: large cities disproportionately attract both high- and low-skilled workers, while average skills are constant across city size. This pattern of spatial sorting is consistent with extreme-skill complementarity, where the productivity of high-skilled workers and of the providers of low-skilled services are mutually enhanced.

Citations

• Wage Discrimination: Reduced Form and Structural Estimates
• Male-Female Wage Differentials in Urban Labor Markets

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