The supply and demand of skilled workers in cities and the role of industry composition

Jeffrey Brinkman

No 14-32, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: The share of high-skilled workers in U.S. cities is positively correlated with city size, and this correlation strengthened between 1980 and 2010. Furthermore, during the same time period, the U.S. economy experienced a significant structural transformation with regard to industrial composition, most notably in the decline of manufacturing and the rise of high-skilled service industries. To decompose and investigate these trends, this paper develops and estimates a spatial equilibrium model with heterogeneous firms and workers that allows for both industry-specific and skill-specific technology changes across cities. The estimates imply that both supply and demand of high-skilled labor have increased over time in big cities. In addition, demand for skilled labor in large cities has increased somewhat within all industries. However, this aggregate increase in skill demand in cities is highly concentrated in a few industries. The finance, insurance, and real estate sectors alone account for 35 percent of the net change over time.

Keywords: Production; Amenities; Cities; Skilled labor (search for similar items in EconPapers)
JEL-codes: J21 J61 R12 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2014-10-20
New Economics Papers: this item is included in nep-lab, nep-lma and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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