Tasks, cities and urban wage premia

Combining rich administrative data for Germany with representative workforce surveys, I find that job task content is robustly predictive of differences in urban wage premia across otherwise observationally equivalent individuals. Based on this, I propose a model where productive advantages of cities are inherently task-specific. Workers of higher ability have a comparative advantage in the tasks whose production benefits the most from urban spillovers. In equilibrium, bigger cities generate larger externalities for more able agents and urban wage premia is skill-biased. I estimate the model using German worker panel data on 336 districts, 331 occupations, 3 education categories and 3 tasks. I find that one standard deviation increase in abstract task intensity is associated with a 5-percentage point increase in the elasticity of earnings with respect to population size. Differences in task-specific urban wage premia remain significant even after controlling for skill premia of larger cities.