Working Paper: CEPR ID: DP5087
Authors: Gilles Duranton; Hubert Jayet
Abstract: This paper provides some evidence that the division of labour is limited by the extent of the (local) market. We first propose a theoretical model. Its main prediction is that scarce occupations are over-represented in large cities. Using census data for French cities, we then provide strong empirical support for this prediction.
Keywords: division of labour; extent of the market; specialization
JEL Codes: J24; J44; R23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| city size (R12) | division of labor (L23) |
| city size (R12) | overrepresentation of scarce occupations (J44) |
| overrepresentation of scarce occupations (J44) | division of labor (L23) |