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  • Roberto Pinheiro

    (University of Colorado)

  • Kurt Schmidheiny

    (UPF)

  • Jan Eeckhout

    (UPF)

Abstract

We propose a theory of skill mobility across cities. It predicts the well documented city size-wage premium: the wage distribution in large cities rst-order stochastically dominates that in small cities. Yet, because this premium is reflected in higher house prices, this does not necessarily imply that this stochastic dominance relation also exists in the distribution of skills. Instead, we find there is second-order stochastic dominance in the skill distribution. The demand for skills is non-monotonic as our model predicts a "Sinatra" as well as an |Eminem" eect: both the very high and the very low skilled disproportionately sort into the biggest cities, while those with medium skill levels sort into small cities. The pattern of spatial sorting is explained by a technology with a varying elasticity of substitution that is decreasing in skill density. Using CPS data on wages and Census data on house prices, we nd that this technology is consistent with the observed patterns of skills.

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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2011 Meeting Papers with number 488.

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Date of creation: 2011
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Handle: RePEc:red:sed011:488

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References

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Cited by:
  1. Marko Koethenbuerger, 2012. "Competition for Migrants in a Federation: Tax or Transfer Competition?," EPRU Working Paper Series 2012-01, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  2. Alberto Dalmazzo & Antonio Accetturo & Guido de Blasio, 2012. "Skill Polarization in Local Labour Markets under Share-Altering Technical Change," ERSA conference papers ersa12p288, European Regional Science Association.
  3. Rafael Alvarado & Miguel Atienza, 2014. "The role of market access and human capital in regional wage disparities: Empirical evidence for Ecuador," Documentos de Trabajo en Economia y Ciencia Regional 53, Universidad Catolica del Norte, Chile, Department of Economics, revised Mar 2014.
  4. Behrens, Kristian & Pokrovsky, Dmitry & Zhelobodko, Evgeny, 2014. "Market Size, Entrepreneurship, and Income Inequality," CEPR Discussion Papers 9831, C.E.P.R. Discussion Papers.
  5. Suzanne Kok, 2013. "Town and city jobs: Your job is different in another location," CPB Discussion Paper 246, CPB Netherlands Bureau for Economic Policy Analysis.

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