The Global Value of Cities

Aakash Bhalothia, Gavin Engelstad, Gaurav Khanna and Harrison Mitchell

No 34503, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We estimate the economic value of cities worldwide, using detailed job histories for 513 million workers in 220,000 cities across 191 countries. These estimates allow us to identify why some cities are more productive than others and to quantify the earnings gains from migration throughout the development process. Our data contain job spells—with start and end dates, establishment names, locations, job titles, and effective salaries—enabling an event-study movers design with individual and time fixed effects. Moving to higher-value cities leads to immediate increases in job seniority, shifts into better-paid industries and occupations, and large overall earnings gains. The global scope of the data lets us compare internal and international moves and assess how the productivity advantages of cities differ by country income level. Across borders, 93% of wage changes reflect city effects, while within countries this share ranges from 45–73%. High-income countries exhibit stronger ability-based sorting, reducing the proportion attributable to place. City effects rise with industrial diversity and population, consistent with agglomeration economies, and more productive cities allocate workers to higher-productivity firms. The wide dispersion of city effects within countries highlights substantial potential gains from migration, particularly in low-income, less-urbanized economies. Reallocating workers to match the US distribution yields sizable wage gains in developing countries.

JEL-codes: J38 J6 O15 R12 R23 (search for similar items in EconPapers)
Date: 2025-11
New Economics Papers: this item is included in nep-geo, nep-ifn, nep-lab and nep-tid
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