The Changing Global Division of Labor in Software: Emergence and Diffusion of New Programming Skills across IT Hubs

With the rise of new industries, often new jobs emerge. Evolutionary Economic Geography and in particular Industry Life Cycle perspectives predict that these activities first emerge in a limited number of cities to then diffuse to other locations as job descriptions become more standardized. Here, we focus on a particularly important new industry: software development, an activity that is economically important, quickly changing, and has a pronounced spatial concentration in a small number of global IT hubs. We use an online database of over 60 million questions and answers about problems in software development that yields a longitudinal dataset of 237 software skills. By geo-locating 3 million posting users at regular intervals, we link these skills to cities worldwide. We find that, in spite of its digital nature, the software industry exhibits similar spatial regularities as previously observed in more traditional sectors. First, cities diversify into skills that are related to their existing ones. Second, new skills first emerge in cities with large and diversified software sectors, and later diffuse -- mostly unhindered by geographical distance -- to smaller cities specialized in closely related skills. We find suggestive but limited support for a windows of locational opportunity account: although even brand-new skills still emerge first in cities with strong prior specialization in related skills, concentrations of related activities impact less the emergence of new skills than the diffusion of existing ones.