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City of Dreams

Author

Listed:
  • Jorge De la Roca
  • Gianmarco I P Ottaviano
  • Diego Puga

Abstract

Bigger cities offer more valuable experiences and opportunities in exchange for higher housing costs. While higher-ability workers benefit more from bigger cities, they are not more likely to move to one. Our model of urban sorting by workers with heterogeneous self-confidence and ability suggests flawed self-assessment is partly to blame. Analysis of the National Longitudinal Survey of Youth 1979 data shows that, consistent with our model, young workers with high self-confidence are more likely to locate in a big city initially. For more experienced workers, ability plays a stronger role in determining location choices, but the lasting impact of earlier choices dampens their incentives to move.

Suggested Citation

  • Jorge De la Roca & Gianmarco I P Ottaviano & Diego Puga, 2023. "City of Dreams," Journal of the European Economic Association, European Economic Association, vol. 21(2), pages 690-726.
    • Handle: RePEc:oup:jeurec:v:21:y:2023:i:2:p:690-726.
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    File URL: http://hdl.handle.net/10.1093/jeea/jvac042
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    Cited by:

    1. Ahlin, Lina & Andersson, Martin & Thulin, Per, 2016. "Human Capital Sorting - the ‘when’ and ‘who’ of sorting of talents to urban regions," Working Paper Series in Economics and Institutions of Innovation 430, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    2. Fabien Candau & Elisa Dienesch, 2015. "Spatial distribution of skills and regional trade integration," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(2), pages 451-488, March.
    3. De la Roca, Jorge, 2017. "Selection in initial and return migration: Evidence from moves across Spanish cities," Journal of Urban Economics, Elsevier, vol. 100(C), pages 33-53.
    4. Jorge De La Roca & Diego Puga, 2017. "Learning by Working in Big Cities," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(1), pages 106-142.
    5. Charly Porcher & Hannah Rubinton & Clara Santamaría, 2020. "The Role of Establishment Size in the City-Size Earnings Premium," Working Papers 2020-029, Federal Reserve Bank of St. Louis, revised 29 Nov 2022.

    More about this item

    JEL classification:

    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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