Working Paper: NBER ID: w20602
Authors: Donald R. Davis; Jonathan I. Dingel
Abstract: What determines the distributions of skills, occupations, and industries across cities? We develop a theory to jointly address these fundamental questions about the spatial organization of economies. Our model incorporates a system of cities, their internal urban structures, and a high-dimensional theory of factor-driven comparative advantage. It predicts that larger cities will be skill-abundant and specialize in skill-intensive activities according to the monotone likelihood ratio property. We test the model using data on 270 US metropolitan areas, 3 to 9 educational categories, 22 occupations, and 21 manufacturing industries. The results provide support for our theory's predictions.
Keywords: No keywords provided
JEL Codes: F11; F14; R12; R13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| City Size (R12) | Skill Abundance (J24) |
| City Size (R12) | Skill-Intensive Activities (J24) |
| Skill Abundance (J24) | Higher Employment in Skill-Intensive Sectors (J24) |
| City Size (R12) | Higher Total Factor Productivity (TFP) (O49) |