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Is the division of labour limited by the extent of the market? Evidence from French cities

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  • Duranton, Gilles
  • Jayet, Hubert

Abstract

This paper provides supportive evidence to the notion that the division of labour is limited by the extent of the (local) market. We first propose a theoretical model. Its main prediction is that scarce specialists occupations are over-represented in large cities. Using census data for French cities, we find strong empirical support for this prediction.

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File URL: http://www.sciencedirect.com/science/article/pii/S0094-1190(10)00052-5
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Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 69 (2011)
Issue (Month): 1 (January)
Pages: 56-71

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Handle: RePEc:eee:juecon:v:69:y:2011:i:1:p:56-71
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622905

Keywords: Division of labour Specialisation Extent of the market;

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Find related papers by JEL classification:
  • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
  • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
  • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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  1. Matouschek, Niko & Robert-Nicoud, Frédéric, 2003. "The Role of Human Capital Investments in the Location Decisions of Firms," CEPR Discussion Papers 3875, C.E.P.R. Discussion Papers.
  2. Garicano, Luis & Hubbard, Thomas, 2003. "Specialization, Firms and Markets: The division of Labour Between and Within Law Firms," CEPR Discussion Papers 3699, C.E.P.R. Discussion Papers.
  3. Helsley, Robert W. & Strange, William C., 2007. "Agglomeration, opportunism, and the organization of production," Journal of Urban Economics, Elsevier, vol. 62(1), pages 55-75, July.
  4. Gilles Duranton & Diego Puga, 2000. "Nursery Cities: Urban diversity, process innovation, and the life-cycle of products," Working Papers dpuga-00-01, University of Toronto, Department of Economics.
  5. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
  6. Guy Michaels, 2007. "The division of labor, coordination, and the demand for information processing," LSE Research Online Documents on Economics 3251, London School of Economics and Political Science, LSE Library.
  7. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
  8. Duranton, Gilles & Puga, Diego, 2005. "From sectoral to functional urban specialisation," Journal of Urban Economics, Elsevier, vol. 57(2), pages 343-370, March.
  9. Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2004. "Spatial Wage Disparities: Sorting Matters!," CEPR Discussion Papers 4240, C.E.P.R. Discussion Papers.
  10. Duranton, Gilles & Puga, Diego, 2004. "Micro-foundations of urban agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 48, pages 2063-2117 Elsevier.
  11. Thomas J. Holmes, 1999. "Localization Of Industry And Vertical Disintegration," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 314-325, May.
  12. Moretti, Enrico, 2010. "Local Labor Markets," IZA Discussion Papers 4905, Institute for the Study of Labor (IZA).
  13. Tomoya Mori & Koji Nishikimi & Tony E. Smith, 2004. "A Divergence Statistic for Industrial Localization," KIER Working Papers 587, Kyoto University, Institute of Economic Research.
  14. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 49, pages 2119-2171 Elsevier.
  15. Helsley, Robert W. & Strange, William C., 1990. "Matching and agglomeration economies in a system of cities," Regional Science and Urban Economics, Elsevier, vol. 20(2), pages 189-212, September.
  16. Behrens, Kristian & Duranton, Gilles & Robert-Nicoud, Frédéric, 2010. "Productive cities: Sorting, selection and agglomeration," CEPR Discussion Papers 7922, C.E.P.R. Discussion Papers.
  17. Gary S. Becker & Kevin M. Murphy, 1992. "The Division of Labor, Coordination Costs, and Knowledge," The Quarterly Journal of Economics, Oxford University Press, vol. 107(4), pages 1137-1160.
  18. Wagner, Alfred, 1891. "Marshall's Principles of Economics," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 5, pages 319-338.
  19. Baumgardner, James R, 1988. "Physicians' Services and the Division of Labor across Local Markets," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 948-82, October.
  20. Coles, Melvyn G & Smith, Eric, 1998. "Marketplaces and Matching," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(1), pages 239-54, February.
  21. Baumgardner, James R, 1988. "The Division of Labor, Local Markets, and Worker Organization," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 509-27, June.
  22. Henderson, Vernon, 1997. "Medium size cities," Regional Science and Urban Economics, Elsevier, vol. 27(6), pages 583-612, November.
  23. George J. Stigler, 1951. "The Division of Labor is Limited by the Extent of the Market," Journal of Political Economy, University of Chicago Press, vol. 59, pages 185.
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