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Cognitive Hubs and Spatial Redistribution

Author

Listed:
  • Esteban Rossi-Hansberg
  • Pierre-Daniel Sarte
  • Felipe Schwartzman

Abstract

In the United States, cognitive nonroutine (CNR) occupations are disproportionately and increasingly represented in large cities. To study the allocation of workers across cities, we propose a quantitative spatial equilibrium model with multiple industries employing CNR and non-CNR workers. Productivity is city-industry-occupation specific and, as we estimate, partly determined by externalities that depend on local occupation shares and total employment. An optimal policy that benefits workers equally incentivizes the formation of cognitive hubs in large cities. It also creates higher overall activity in small cities, greater industrial specialization in the largest and smallest cities, and greater diversification in medium-sized cities.

Suggested Citation

  • Esteban Rossi-Hansberg & Pierre-Daniel Sarte & Felipe Schwartzman, 2026. "Cognitive Hubs and Spatial Redistribution," American Economic Journal: Macroeconomics, American Economic Association, vol. 18(2), pages 72-111, April.
    • Handle: RePEc:aea:aejmac:v:18:y:2026:i:2:p:72-111
    DOI: 10.1257/mac.20230013
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    2. Fabian Eckert & Sharat Ganapati & Conor Walsh, 2020. "Urban-Biased Growth: A Macroeconomic Analysis," CESifo Working Paper Series 8705, CESifo.
    3. Redding, Stephen, 2020. "Trade and Geography," CEPR Discussion Papers 15268, C.E.P.R. Discussion Papers.
    4. Sebastian Siegloch & Nils Wehrhöfer & Tobias Etzel, 2025. "Spillover, Efficiency, and Equity Effects of Regional Firm Subsidies," American Economic Journal: Economic Policy, American Economic Association, vol. 17(1), pages 144-180, February.
    5. Fan, Jianyong & Liu, Nian & Tang, Wei, 2025. "Skills and the city in China," Regional Science and Urban Economics, Elsevier, vol. 111(C).
    6. Nordin, Martin & Hammarlund, Cecilia & Bergh, Andreas, 2025. "A study of job polarization in Sweden from an urban-rural perspective," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 59, pages 1-010.
    7. Jan Eeckhout & Christoph Hedtrich & Roberto Pinheiro, 2026. "IT and Urban Polarization," American Economic Journal: Macroeconomics, American Economic Association, vol. 18(1), pages 223-259, January.
    8. Katheryn N. Russ & Jay C. Shambaugh & Sanjay R. Singh, 2024. "Currency Areas, Labor Markets, and Regional Cyclical Sensitivity," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 72(1), pages 152-195, March.
    9. Tatsuru Kikuchi, 2025. "A Unified Framework for Spatial and Temporal Treatment Effect Boundaries: Theory and Identification," Papers 2510.00754, arXiv.org, revised Oct 2025.
    10. Gordon H. Hanson & Enrico Moretti, 2025. "Where Have All the Good Jobs Gone? Changes in the Geography of Work in the US, 1980-2021," NBER Working Papers 33631, National Bureau of Economic Research, Inc.
    11. Fabian Bald, Marcel Henkel, 2021. "The Role of Local Public Goods for Gender Gaps in the Spatial Economy," Diskussionsschriften credresearchpaper33, Universitaet Bern, Departement Volkswirtschaft - CRED.
    12. Han, Yuancheng & Miranda-Pinto, Jorge & Tanaka, Satoshi, 2025. "Service Trade, regional specialization, and welfare," Journal of International Economics, Elsevier, vol. 158(C).
    13. Keller, Wolfgang, 2020. "Comments on Mandelman and Waddle's “Intellectual property, tariffs, and international trade dynamics”," Journal of Monetary Economics, Elsevier, vol. 109(C), pages 104-106.
    14. Farid Farrokhi, 2021. "Skill, Agglomeration, And Inequality In The Spatial Economy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(2), pages 671-721, May.
    15. Sharat Ganapati, 2020. "Comment on The Servicification of the US Economy: The Role of Startups versus Incumbent Firms," NBER Chapters, in: The Role of Innovation and Entrepreneurship in Economic Growth, pages 390-396, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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