Studies have suggested that urban agglomeration enhances productivity by facilitating the firm-worker matching process. This article develops a model that formalizes this notion and demonstrates that, when firm capital and worker skill are complementary in production, urban agglomeration will tend to generate more efficient, yet segregated matches. As a result, not only will local market size be positively associated with average productivity, it will also generate greater between-skill-group wage inequality and a higher expected return to skill acquisition. Recent data from the counties and metropolitan areas of the United States is consistent with each of these implications. Copyright 2001 by University of Chicago Press.
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Volume (Year): 19 (2001) Issue (Month): 4 (October) Pages: 879-99 Download reference. The following formats are available: HTML
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Handle: RePEc:ucp:jlabec:v:19:y:2001:i:4:p:879-99
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Christopher H. Wheeler, 2005.
"Cities, Skills, and Inequality,"
Growth and Change,
Gatton College of Business and Economics, University of Kentucky, vol. 36(3), pages 329-353.
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