Why Has Urban Inequality Increased?

This paper examines mechanisms driving the more rapid increases in wage inequality in larger cities between 1980 and 2007. Production function estimates indicate strong evidence of capital–skill complementarity and increases in the skill bias of agglomeration economies in the context of rapid skill-biased technical change. Immigration shocks are the source of identifying variation across cities in changes to the relative supply of skilled versus unskilled labor. Estimates indicate that changes in the factor biases of agglomeration economies rationalize at least 80 percent of the more rapid increases in wage inequality in larger cities. (JEL J24, J31, O33, R23)

• Publication year

  2018

• Venue

  American Economic Journal: Applied Economics

• Publication date

  2018-10-01

• Fields of study

  Mathematics, Economics

• Identifiers
  DOI 10.1257/APP.20160510
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

• The Incidence of Local Labor Demand Shocks

  2020cited by this paper
• Urban Population and Amenities: The Neoclassical Model of Location.

  2020cited by this paper
• Wage growth, ability sorting, and location choice at labor-force entry: New evidence from U.S. Census data

  2016cited by this paper
• The Determinants and Welfare Implications of US Workers' Diverging Location Choices by Skill: 1980-2000

  2016cited by this paper
• Concepts and Methods

  2014cited by this paper
• The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market

  2013cited by this paper
• Inequality and City Size

  2013influential reference
• The Effect of Immigration along the Distribution of Wages

  2013cited by this paper
• RETHINKING THE EFFECT OF IMMIGRATION ON WAGES

  2012cited by this paper
• The Economics of Density: Evidence from the Berlin Wall

  2012cited by this paper
• Understanding the City Size Wage Gap.

  2012cited by this paper
• Immigration, Skill Mix, and Capital Skill Complementarity

  2011cited by this paper
• The Geographic Determinants of Housing Supply

  2010cited by this paper
• Identifying the Elasticity of Substitution with Biased Technical Change

  2010cited by this paper
• What are Cities Worth? Land Rents, Local Productivity, and the Capitalization of Amenity Values

  2009cited by this paper
• Skills in the city

  2009cited by this paper
• Identifying Agglomeration Spillovers: Evidence from Million Dollar Plants

  2008cited by this paper
• Estimating agglomeration economies with history, geology and worker effects

  2008cited by this paper
• Trends in U.S. Wage Inequality: Revising the Revisionists

  2008cited by this paper
• The returns to skill

  2006cited by this paper
• NBER WORKING PAPER SERIES RETHINKING THE EFFECTS OF IMMIGRATION ON WAGES

  2006cited by this paper
• Long-Run Substitutability Between More and Less Educated Workers: Evidence from U.S. States, 19501990

  2004cited by this paper
• Is the U.S. Aggregate Production Function Cobb-Douglas? New Estimates of the Elasticity of Substitution

  2004cited by this paper
• Capital-Skill Complementarity? Evidence from a Panel of Countries

  2004cited by this paper
• Micro-Foundations of Urban Agglomeration Economies

  2003cited by this paper
• The Skill Content of Recent Technological Change: An Empirical Exploration

  2003cited by this paper
• The Rise of the Skilled City

  2003cited by this paper
• Wage and Productivity Dispersion in U.S. Manufacturing: The Role of Computer Investment

  2002cited by this paper
• Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration

  2001cited by this paper
• Do Immigrant Inflows Lead to Native Outflows

  2000cited by this paper
• Estimating Capital Inputs for Productivity Measurement: An Overview of U.S. Concepts and Methods

  1999cited by this paper
• Understanding the City

  1998cited by this paper
• Computing Inequality: Have Computers Changed the Labor Market?

  1998cited by this paper
• The Origins of Technology-Skill Complementarity

  1998cited by this paper
• Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality

  1998cited by this paper
• Long-Run Implications of Investment-Specific Technological Change

  1995cited by this paper
• Wage Inequality and the Rise in Returns to Skill

  1993cited by this paper
• Changes in the structure of wages in the 1980's: an evaluation of alternative explanations.

  1992cited by this paper
• Wages, Rents, and the Quality of Life

  1982cited by this paper
• Capital-Skill Complementarity

  1969cited by this paper
• Federal Reserve Bank of Minneapolis Research Department Staa Report # 236 Capital-skill Complementarity and Inequality: a Macroeconomic Analysis

  year unknowninfluential reference
• Federal Reserve Bank of Minneapolis Research Department Staff Report 325 a Theory of Factor Allocation and Plant Size

  year unknowncited by this paper

• Labor market polarization and the great urban divergence

  2026cites this paper
• Subnational survey data reveal persistent gaps in living standards across 75 low and middle-income countries

  2025cites this paper
• Spatial wage differentials, geographic frictions and the organization of labor within firms

  2025cites this paper
• Immigrants and the benefits of urban experience

  2025cites this paper
• Subjective Perception and Spatial Equity: Geographic Characteristics of Educational Divergence in Guangdong Province

  2025cites this paper
• Homeownership, Polarization, and Inequality

  2025cites this paper
• Evolution of migrant workers’ roles and attitudes amidst robotic production: Evidence from China

  2025cites this paper
• Has inequality grown or declined in global south Cities? Trends in occupational structure, education, and living standards

  2025cites this paper
• Housing demand, inequality, and spatial sorting

  2025cites this paper
• Does the urban wage premium imply a higher firms’ labor share in big cities?

  2025cites this paper
• Multiple Scales of Income Inequality: A Longitudinal Analysis of Swedish Regions

  2025cites this paper
• Parallel scaling of elite wealth in ancient Roman and modern cities with implications for understanding urban inequality

  2025cites this paper
• Spatial Equilibrium and the Regional Effects of Trade Liberalization: Evidence from Mexico

  2025cites this paper
• Black and Latinx workers reap lower rewards than White workers from years spent working in big cities

  2025cites this paper
• URBICIDAL ECONOMICS AND THE RACIAL GEOGRAPHIES OF TRIAGE

  2025cites this paper
• Sorting to Expensive Cities

  2025cites this paper
• Impact of extreme rainfall shocks on the educational performance of vulnerable urban students: evidence from Brazil

  2024cites this paper
• Capital-Skill Complementarity in Firms and in the Aggregate Economy

  2024cites this paper
• Earnings, Productivity and Housing Expenditure: Who Retains the Wage‐Related Agglomeration Effect?

  2024cites this paper
• Does inequality exist in attaining sustainable development goals within a city? A case study in Pune city, India

  2024cites this paper
• Does inequality in urban population distribution lead to income inequality? Evidence from India

  2024cites this paper
• Re-evaluating the urban wage premium: the changing roles of geographical and job transitions for women and men,2

  2024cites this paper
• Modelling economic development of an industrial metropolis

  2024cites this paper
• Homeowner-renter wealth inequalities and position in the rural-urban hierarchy

  2024cites this paper
• The nature, causes, and consequences of inter-regional inequality

  2024cites this paper
• Educational and gender heterogeneity of the rural-urban earnings premium: New evidence from Norway

  2024cites this paper
• Urban residence as a driver of wealth differentials: New evidence from Norway

  2024cites this paper
• Spatial Wage Inequality in North America and Western Europe: Changes Between and Within Local Labour

  2023cites this paper
• Situational analysis and urban theory

  2023cites this paper
• Quality of communications infrastructure, local structural transformation, and inequality

  2023cites this paper
• How Green Finance Reshapes Employment Structure: Evidence from Green Credit

  2023cites this paper
• On the geography of inequality: labour sorting in general equilibrium

  2023cites this paper
• Does urbanization increase inequality? Race, gender, and the urban wage premium

  2023influential citation
• Public sector wage compression and wage inequality: gender and geographic heterogeneity

  2023cites this paper
• Is income inequality converging at the regional level? Evidence from LIS data

  2023cites this paper
• Agglomeration Over the Long Run: Evidence from County Seat Wars∗

  2023cites this paper
• The Urban Wage Premium in Historical Perspective

  2023cites this paper
• Student Debt and High-Skill Worker Location Choice∗

  2023cites this paper
• Differential impact of maternal education on under-five mortality in rural and urban India.

  2023cites this paper
• The role amenities play in spatial sorting of migrants and their impact on welfare: Evidence from China

  2023cites this paper
• Migration, education, technological change and growing urban inequality

  2023cites this paper
• Vertical Migration Externalities

  2023cites this paper
• Organization & density-related differences in within-firm wage disparities

  2022cites this paper
• Association of stay-at-home orders and COVID-19 incidence and mortality in rural and urban United States: a population-based study

  2022cites this paper
• The impact of a local human capital shock: evidence from World War II veterans

  2022cites this paper
• Changes in Urban Wages, Jobs, and Workers from 1958-2017

  2022cites this paper
• The Spatial Consequences of Financial Frictions: Evidence From Brazil*

  2022influential citation
• Cognitive Hubs and Spatial Redistribution

  2022influential citation
• Intergroup relations and media: The effects of media system quality in explaining immigration attitudes

  2022cites this paper
• Spatial Equilibrium? The Difference of Real Income, Housing Markets, and Migration Flows between Russian Cities

  2022cites this paper
• Urbanicity, posttraumatic stress disorder, and effect modification by socioeconomic position: A nested case–control study of the Korean National Health Insurance Database

  2022cites this paper
• The interplay between location and strategy in a turbulent age

  2022cites this paper
• Building Bridges and Widening Gaps

  2022cites this paper
• A The Elasticity Dataset

  2022cites this paper
• Publication and Attenuation Biases in Measuring Skill Substitution

  2022cites this paper
• Spatial Polarization

  2022influential citation
• Urban poverty, growth, and inequality: A needed paradigm shift?

  2022cites this paper
• International migration and income distribution in New Zealand metropolitan and non-metropolitan areas

  2022cites this paper
• Does City Size Affect International Migrants and Native-Born Workers Differently? Exploring Inequalities in Unemployment and Occupations Across Spanish Cities

  2022cites this paper
• The evolution of wage inequality within local U.S. labor markets

  2022cites this paper
• Spatial Sorting and Inequality

  2022cites this paper
• The Geography of Job Tasks

  2021cites this paper
• SKILL, AGGLOMERATION, AND INEQUALITY IN THE SPATIAL ECONOMY

  2021cites this paper
• Agglomeration of low-productive entrepreneurs to large regions: a simple model

  2021cites this paper
• Mysteries of the trade? Skill-specific local agglomeration economies

  2021cites this paper
• Education in Mathematics and the Spread of COVID-19

  2021influential citation
• IT and Urban Polarization

  2021influential citation
• The urban-rural polarisation of political disenchantment: an investigation of social and political attitudes in 30 European countries

  2021cites this paper
• Who partners up? Homogamy and income inequality in New Zealand cities

  2021cites this paper
• Infrastructural Investments and Economic Growth: Evidence from Pakistan

  2021cites this paper
• The Heterogeneous E ect of Local Land-Use Restrictions Across US Households . ∗

  2021cites this paper
• Displacement and the Consequences of Gentrification (cid:63)

  2020cites this paper
• The Geography of Business Dynamism and Skill Biased Technical Change

  2020influential citation
• Country-Level Data

  2020cites this paper
• Incentivizing the Missing Middle: The Role of Economic Development Policy

  2020cites this paper
• Scaling the Political World

  2020cites this paper
• Superstar cities and left-behind places: disruptive innovation, labor demand, and interregional inequality

  2020cites this paper
• Institutionalized Succession

  2020cites this paper
• Interviews

  2020cites this paper
• Concentration

  2020cites this paper
• Civil Conflict

  2020cites this paper
• Participation

  2020cites this paper
• Particularism

  2020cites this paper
• Approaches

  2020cites this paper
• Index

  2020cites this paper
• The comparative advantage of cities

  2020cites this paper
• Broken Instruments

  2020cites this paper
• Sorting Out Housing

  2020cites this paper
• Representativeness

  2020cites this paper
• State and Local Taxes and Employment by Wage Level

  2020cites this paper
• What You Make Depends on Where You Live: College Earnings across States and Metropolitan Areas.

  2020cites this paper
• Digital Labor Market Inequality and the Decline of IT Exceptionalism

  2020cites this paper
• Population and Politics

  2020cites this paper
• The Faltering Escalator of Urban Opportunity

  2020cites this paper
• Other Outcomes

  2020cites this paper
• Erratum to: The urban–rural education gap: do cities indeed make us smarter?

  2020cites this paper
• Professionalism

  2020cites this paper
• Productivity and inequality in the UK: a political economy perspective

  2020cites this paper
• Contestation

  2020cites this paper
• References

  2020cites this paper