The Comparative Advantage of Cities

NBER Working Paper No. 20602

Issued in October 2014

NBER Program(s):International Trade and Investment, Labor Studies



What determines the distributions of skills, occupations, and industries across cities? We develop a theory to jointly address these fundamental questions about the spatial organization of economies. Our model incorporates a system of cities, their internal urban structures, and a high-dimensional theory of factor-driven comparative advantage. It predicts that larger cities will be skill-abundant and specialize in skill-intensive activities according to the monotone likelihood ratio property. We test the model using data on 270 US metropolitan areas, 3 to 9 educational categories, 22 occupations, and 21 manufacturing industries. The results provide support for our theory's predictions.

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w20602

Published: Donald R. Davis & Jonathan I. Dingel, 2020. "The comparative advantage of cities," Journal of International Economics, . citation courtesy of

Users who downloaded this paper also downloaded* these: