In Search of Better Opportunities : Sorting and Agglomeration Effects among Young College Graduates in Colombia

This paper studies the dynamic sorting of workers prior to labor market entry that leads toskill differences across cities of different sizes, as well as its consequences on the estimation of agglomerationeffects. Using rich administrative data for young, college-educated workers in Colombia, the paper shows thatthe most talented and best trained sort to big cities primarily because they attend college there and remain forwork. The availability of colleges in an individual's high school city, parental resources, and high school citysize are the most important determinants of the decision to move for college. The relatively less able remain in mediumand small cities or move there for work after attending college in big cities. Pre-labor market sorting thusconcentrates population and skill in big cities. As a result of this sorting, agglomeration effects are stronger forcollege than work city size, even after controlling for mediating factors such as individual ability or college selectivity.