Spatial Sorting: Big Cities, Big Inequality

It is well known that big cities attract talented professionals, artists and financiers. We provide new evidence that they also disproportionately attract low skilled workers. While the average of skills is constant across cities of different sizes, the inequality of skills is larger in big cities. A mobile workforce systematically sorts into different locations taking into account wages and the cost of living. We are able to attribute this pattern of sorting to the strong complementarity between high and low skilled work. Highly productive workers boost their productivity by hiring more low skilled collaborators, and by employing more domestic and professional services.

Biography: Jan Eeckhout (PhD, London School of Economics) is professor of economics at University College London. He has research interests in applied economics, with a special emphasis on the labor market. He studies unemployment, organizational design, and inequality in cities. His work has been published in the American Economic Review, Econometrica, the Review of Economic Studies, and has been supported by several government grants, including funding from the National Science Foundation (US) and the European Research Council. Jan Eeckhout has been a tenured professor at the University of Pennsylvania, and he has also taught at NYU Stern and visited MIT. He has been an editor of the International Economic Review.