Journal of Labor Economics Vol. 19 No. 4 2001
Search, Sorting, and Urban Agglomeration
Abstract
Studies have suggested that urban agglomeration enhances productivity by facilitating the firm‐worker matching process. This article develops a model that formalizes this notion and demonstrates that, when firm capital and worker skill are complementary in production, urban agglomeration will tend to generate more efficient, yet segregated matches. As a result, not only will local market size be positively associated with average productivity, it will also generate greater between‐skill‐group wage inequality and a higher expected return to skill acquisition. Recent data from the counties and metropolitan areas of the United States is consistent with each of these implications.
- DOI
- 10.1086/322823
- Volume
- 19
- Issue
- 4
- Pages
- 879-899
- Language
- en
- Sources
- openalex crossref