|Publication Type||Working Paper|
|Year of Publication||2019|
|Authors||Cerina, F, Dienesch, E, Moro, A, Rendall, M|
|ISBN Number||978 88 68512 347|
|Keywords||City Sizes, Employment Polarization, Spatial Sorting|
In this paper we study the allocation of skills across space and time in the U.S. We start by documenting two facts on the phenomenon of employment polarization: i) it is stronger in larger vs smaller cities and ii) it is mainly driven by heads rather than hours. We then build a spatial general equilibrium model in which workers with heterogeneous skills choose the location in which they live and work. The model provides a theory based measure of skills that we use to investigate how the skill distribution changes across time and space in the U.S. Consistent with the empirical evidence on employment polarization by city size, we find that between 1980 and 2008 larger cities display a higher increase in the fraction of both high- and low-skilled workers relative to smaller cities, which in turn display a higher increase in the fraction of medium- skilled. We calibrate the model to evaluate the role of technology and find that faster skill-biased technological change in larger cities can account for a substantial fraction of the differential emergence of fat tails and employment polarization between large and small cities.