The Determinants and Welfare Implications of US Workers' Diverging Location Choices by Skill: 1980-2000
- (pp. 479-524)
Abstract
From 1980 to 2000, the rise in the US 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. (JEL D31, I26, J24, J31, J61, R23)Citation
Diamond, Rebecca. 2016. "The Determinants and Welfare Implications of US Workers' Diverging Location Choices by Skill: 1980-2000." American Economic Review, 106 (3): 479-524. DOI: 10.1257/aer.20131706Additional Materials
JEL Classification
- D31 Personal Income, Wealth, and Their Distributions
- I26 Returns to Education
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials
- J61 Geographic Labor Mobility; Immigrant Workers
- R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics