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IT and Urban Polarization

By Jan Eeckhout, Christoph Hedtrich, and Roberto Pinheiro

American Economic Journal: Macroeconomics, January 2026

We show that differential IT investment across cities has been a key driver of job and wage polarization since the 1990s. Using a novel dataset, we establish two stylized facts: IT investment is highest in firms in large and expensive cities, and the decl...