Full Citation

Title: The Supply and Demand of Skilled Workers in Cities and the Role of Industry Composition

Citation Type: Working Paper

Publication Year: 2014

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Abstract: The share of high-skilled workers in U.S. cities is positively correlated with city size, and this correlation strengthened between 1980 and 2010. Furthermore, during the same time period, the U.S. economy experienced a significant structural transformation with regard to industrial composition, most notably in the decline of manufacturing and the rise of high-skilled service industries. To decompose and investigate these trends, this paper develops and estimate a spatial equilibrium model with heterogeneous firms and workers that allow for both industry-specific and skill-specific technology changes across cities. The estimates imply that both supply and demand of high-skilled labor have increased over time in big cities. In addition, demand for skilled labor in large cities has increased somewhat within all industries. However, this aggregate increase in skill demand in cities is highly concentrated in a few industries. The finance, insurance, and real estate sectors alone account for 35 percent of the net change over time.

Url: http://www.philadelphiafed.org/research-and-data/publications/working-papers/2014/wp14-32.pdf

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Authors: Brinkman, Jeffrey C.

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Publication Number: 14-32

Institution: Federal Reserve Bank of Philadelphia

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Publisher Location: Philadelphia, PA

Data Collections: IPUMS USA

Topics: Education, Labor Force and Occupational Structure, Land Use/Urban Organization, Other

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