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The Determinants and Welfare Implications of US Workers' Diverging Location Choices by Skill: 1980-2000

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  • Diamond, Rebecca

    (Stanford University)

Abstract

From 1980 to 2000, the rise in the U.S. college-high school graduate wage gap coincided with increased geographic sorting as college graduates concentrated in high wage, high rent cities. This paper estimates a structural spatial equilibrium model to determine causes and welfare consequences of this increased skill sorting. While local labor demand changes fundamentally caused the increased skill sorting, it was further fueled by endogenous increases in amenities within higher skill cities. Changes in cities' wages, rents, and endogenous amenities increased inequality between high-school and college graduates by more than suggested by the increase in the college wage gap alone.

Suggested Citation

  • Diamond, Rebecca, 2013. "The Determinants and Welfare Implications of US Workers' Diverging Location Choices by Skill: 1980-2000," Research Papers 3143, Stanford University, Graduate School of Business.
  • Handle: RePEc:ecl:stabus:3143
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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • 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
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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