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Occupational Matching and Cities

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  • Theodore Papageorgiou

    (Boston College)

Abstract

In this paper, I document that workers in larger cities have significantly more occupational options than workers in smaller ones. They are able to form better occupational matches and earn higher wages. I also note differences in the occupational reallocation patterns across cities. I develop a dynamic model of occupational choice that microfounds agglomeration economies and captures the empirical patterns. The calibration of the model suggests that better occupational match quality accounts for approximately 35% of the observed wage premium and a third of the greater inequality in larger cities.

Suggested Citation

  • Theodore Papageorgiou, 2020. "Occupational Matching and Cities," Boston College Working Papers in Economics 1011, Boston College Department of Economics.
    • Handle: RePEc:boc:bocoec:1011
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    More about this item

    Keywords

    Occupations; Agglomeration Economies; Urban Wage Premium; Multi-armed Bandits; Geographical Mobility; Matching Theory; Wage Inequality; Job Vacancy Postings;
    All these keywords.

    JEL classification:

    • 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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