1932

Abstract

The spatial segregation of college-educated and non-college-educated workers between commuting zones in the United States has steadily grown since 1980. We summarize prior work on sorting and location and document new descriptive patterns on how sorting and locations have changed over the past four decades. We find that there has been a shift in the sorting of college-educated workers from cities centered primarily around production in 1980 to cities centered around consumption by 2017. We develop a spatial equilibrium model to understand these patterns and highlight key places where further research is needed. Our framework helps understand the causes and consequences of changes in spatial sorting; their impact on inequality; and how they respond to, and feed into, the changing nature of cities.

Loading

Article metrics loading...

/content/journals/10.1146/annurev-economics-051420-110839
2022-08-12
2024-04-25
Loading full text...

Full text loading...

/deliver/fulltext/economics/14/1/annurev-economics-051420-110839.html?itemId=/content/journals/10.1146/annurev-economics-051420-110839&mimeType=html&fmt=ahah

Literature Cited

  1. Aguiar M, Bils M. 2015. Has consumption inequality mirrored income inequality?. Am. Econ. Rev. 105:92725–56
    [Google Scholar]
  2. Albouy D. 2009. The unequal geographic burden of federal taxation. J. Political Econ. 117:4635–67
    [Google Scholar]
  3. Albouy D, Ehrlich G, Liu Y. 2016a. Housing demand, cost-of-living inequality, and the affordability crisis NBER Work. Pap. 22816
  4. Albouy D, Graf W, Kellogg R, Wolff H. 2016b. Climate amenities, climate change, and American quality of life. J. Assoc. Environ. Resour. Econ. 3:1205–46
    [Google Scholar]
  5. Almagro M, Domínguez-Iino T. 2021. Location sorting and endogenous amenities: evidence from Amsterdam Work. Pap., Booth Sch. Bus., Univ. Chicago Chicago:
  6. Autor D. 2019. Work of the past, work of the future. AEA Pap. Proc 109132
    [Google Scholar]
  7. Baum-Snow N, Freedman M, Pavan R. 2018. Why has urban inequality increased?. Am. Econ. J. Appl. Econ. 10:41–42
    [Google Scholar]
  8. Baum-Snow N, Hartley D 2020. Accounting for central neighborhood change, 1980–2010. J. Urban Econ. 117:103228
    [Google Scholar]
  9. Baum-Snow N, Pavan R. 2013. Inequality and city size. Rev. Econ. Stat. 95:51535–48
    [Google Scholar]
  10. Bayer P, Ferreira F, McMillan R. 2007. A unified framework for measuring preferences for schools and neighborhoods. J. Political Econ. 115:4588–638
    [Google Scholar]
  11. Behrens K, Duranton G, Robert-Nicoud F. 2014. Productive cities: sorting, selection, and agglomeration. J. Political Econ. 122:3507–53
    [Google Scholar]
  12. Behrens K, Robert-Nicoud F. 2015. Agglomeration theory with heterogeneous agents. Handbook of Regional and Urban Economics, Vol. 5 G Duranton, JV Henderson, WC Strange 171–245 Amsterdam: Elsevier
    [Google Scholar]
  13. Benabou R. 1993. Workings of a city: location, education, and production. Q. J. Econ. 108:3619–52
    [Google Scholar]
  14. Benabou R. 1996a. Equity and efficiency in human capital investment: the local connection. Rev. Econ. Stud. 63:2237–64
    [Google Scholar]
  15. Benabou R. 1996b. Heterogeneity, stratification, and growth: macroeconomic implications of community structure and school finance. Am. Econ. Rev. 86:3584–609
    [Google Scholar]
  16. Berry CR, Glaeser EL. 2005. The divergence of human capital levels across cities. Pap. Reg. Sci. 84:3407–44
    [Google Scholar]
  17. Bilal A, Rossi-Hansberg E. 2021. Location as an asset. Econometrica 895245995
    [Google Scholar]
  18. Bound J, Holzer HJ. 2000. Demand shifts, population adjustments, and labor market outcomes during the 1980s. J. Labor Econ. 18:120–54
    [Google Scholar]
  19. Card D, Rothstein J, Yi M 2021. Location, location, location Work. Pap. CES 21-32, Cent. Econ. Stud., US Census Bur. Washington, DC:
  20. Chetty R, Hendren N, Katz LF. 2016. The effects of exposure to better neighborhoods on children: new evidence from the Moving to Opportunity experiment. Am. Econ. Rev. 106:4855–902
    [Google Scholar]
  21. Chetty R, Hendren N, Kline P, Saez E. 2014. Where is the land of opportunity? The geography of intergenerational mobility in the United States. Q. J. Econ. 129:41553–623
    [Google Scholar]
  22. Chetty R, Szeidl A. 2016. Consumption commitments and habit formation. Econometrica 84:2855–90
    [Google Scholar]
  23. Colas M, Hutchinson K. 2021. Heterogeneous workers and federal income taxes in a spatial equilibrium. Am. Econ. J. Econ. Policy 13:2100–34
    [Google Scholar]
  24. Combes PP, Duranton G, Gobillon L. 2008. Spatial wage disparities: Sorting matters!. J. Urban Econ. 63:2723–42
    [Google Scholar]
  25. Combes PP, Duranton G, Gobillon L, Puga D, Roux S. 2012. The productivity advantages of large cities: distinguishing agglomeration from firm selection. Econometrica 80:62543–94
    [Google Scholar]
  26. Couture V, Gaubert C, Handbury J, Hurst E. 2022. Income growth and the distributional effects of urban spatial sorting. Rev. Econ. Stud. In press
    [Google Scholar]
  27. Couture V, Handbury J. 2020. Urban revival in America. J. Urban Econ. 119:103267
    [Google Scholar]
  28. Dauth W, Findeisen S, Moretti E, Suedekum J. 2022. Matching in cities. J. Eur. Econ. AssocIn press. https://doi.org/10.1093/jeea/jvac004
    [Crossref] [Google Scholar]
  29. David H, Dorn D. 2013. The growth of low-skill service jobs and the polarization of the US labor market. Am. Econ. Rev. 103:51553–97
    [Google Scholar]
  30. Davis DR, Dingel JI. 2019. A spatial knowledge economy. Am. Econ. Rev. 109:1153–70
    [Google Scholar]
  31. Davis MA, Ortalo-Magné F. 2011. Household expenditures, wages, rents. Rev. Econ. Dyn. 14:2248–61
    [Google Scholar]
  32. De La Roca J, Puga D. 2016. Learning by working in big cities. Rev. Econ. Stud. 84:1106–42
    [Google Scholar]
  33. Diamond R. 2016. The determinants and welfare implications of US workers' diverging location choices by skill: 1980–2000. Am. Econ. Rev. 106:3479–524
    [Google Scholar]
  34. Diamond R, McQuade T. 2019. Who wants affordable housing in their backyard? An equilibrium analysis of low-income property development. J. Political Econ. 127:31063–117
    [Google Scholar]
  35. Diamond R, McQuade T, Qian F. 2019. The effects of rent control expansion on tenants, landlords, and inequality: evidence from San Francisco. Am. Econ. Rev. 109:93365–94
    [Google Scholar]
  36. Diamond R, Moretti E. 2021. Where is standard of living the highest? Local prices and the geography of consumption Work. Pap., Stanford Univ. Stanford, CA:
  37. Duranton G, Puga D. 2000. Diversity and specialisation in cities: Why, where and when does it matter?. Urban Stud. 37:3533–55
    [Google Scholar]
  38. Durlauf SN. 2004. Neighborhood effects. Handbook of Regional and Urban Economics, Vol. 4 Cities and Geography JV Henderson, JF Thisse 2173–242 Amsterdam: Elsevier
    [Google Scholar]
  39. Eckert F. 2019. Growing apart: tradable services and the fragmentation of the U.S. economy Work. Pap., Univ. Calif. San Diego:
  40. Eeckhout J, Pinheiro R, Schmidheiny K. 2014. Spatial sorting. J. Political Econ. 122:3554–620
    [Google Scholar]
  41. Fajgelbaum P, Gaubert C. 2020. Optimal spatial policies, geography and sorting. Q. J. Econ. 135:2959–1036
    [Google Scholar]
  42. Finlay R, Williams TC. 2020. Sorting and the skill premium: the role of nonhomothetic housing demand Work. Pap., Yale Univ. New Haven, CT:
  43. Fogli A, Guerrieri V. 2019. The end of the American dream? Inequality and segregation in US cities NBER Work. Pap. 26143
  44. Ganong P, Shoag D. 2017. Why has regional income convergence in the U.S. declined?. J. Urban Econ. 102:76–90
    [Google Scholar]
  45. Gaubert C. 2018. Firm sorting and agglomeration. Am. Econ. Rev. 108:113117–53
    [Google Scholar]
  46. Gaubert C, Kline P, Vergara D, Yagan D. 2021a. Trends in US spatial inequality: concentrating affluence and a democratization of poverty. AEA Pap. Proc. 111:520–25
    [Google Scholar]
  47. Gaubert C, Kline PM, Yagan D. 2021b. Place-based redistribution Work. Pap., Univ. Calif. Berkeley:
  48. Gaubert C, Robert-Nicoud F. 2022. Sorting to expensive cities Work. Pap., Univ. Calif. Berkeley:
  49. Giannone E. 2019. Skill-biased technical change and regional convergence Work. Pap., Penn State Univ. State College, PA:
  50. Glaeser EL, Kolko J, Saiz A. 2001. Consumer city. J. Econ. Geogr. 1:127–50
    [Google Scholar]
  51. Glaeser EL, Mare DC. 2001. Cities and skills. J. Labor Econ. 19:2316–42
    [Google Scholar]
  52. Guerrieri V, Hartley D, Hurst E. 2013. Endogenous gentrification and housing price dynamics. J. Public Econ. 100:45–60
    [Google Scholar]
  53. Gyourko J, Mayer C, Sinai T. 2013. Superstar cities. Am. Econ. J. Econ. Policy 5:4167–99
    [Google Scholar]
  54. Handbury J. 2021. Are poor cities cheap for everyone? Non-homotheticity and the cost of living across US cities. Econometrica 89:62679–715
    [Google Scholar]
  55. Hendricks L. 2011. The skill composition of U.S. cities. Int. Econ. Rev. 52:11–32
    [Google Scholar]
  56. Hoelzlein M. 2020. Two-sided sorting and spatial inequality in cities Work. Pap., Univ. Notre Dame Notre Dame, IN:
  57. Marshall A. 1890. Principles of Economics London: Macmillan
  58. Moretti E. 2004. Workers' education, spillovers, and productivity: evidence from plant-level production functions. Am. Econ. Rev. 94:3656–90
    [Google Scholar]
  59. Moretti E. 2013. Real wage inequality. Am. Econ. J. Appl. Econ. 5:165–103
    [Google Scholar]
  60. Neumark D, Simpson H. 2015. Place-based policies. Handbook of Regional and Urban Economics, Vol. 5 G Duranton, JV Henderson, WC Strange 1197–287 Amsterdam: Elsevier
    [Google Scholar]
  61. Notowidigdo MJ. 2020. The incidence of local labor demand shocks. J. Labor Econ. 38:3687–725
    [Google Scholar]
  62. Piyapromdee S. 2020. The impact of immigration on wages, internal migration, and welfare. Rev. Econ. Stud. 88:1406–53
    [Google Scholar]
  63. Reardon SF, Bischoff K. 2011. Income inequality and income segregation. Am. J. Sociol. 116:41092–153
    [Google Scholar]
  64. Reardon SF, Bischoff K, Owens A, Townsend JB. 2018. Has income segregation really increased? Bias and bias correction in sample-based segregation estimates. Demography 55:62129–60
    [Google Scholar]
  65. Redding SJ, Rossi-Hansberg EA. 2017. Quantitative spatial economics. Annu. Rev. Econ. 9:21–58
    [Google Scholar]
  66. Roback J. 1982. Wages, rents, and the quality of life. J. Political Econ. 90:61257–78
    [Google Scholar]
  67. Rosen S. 1979. Wage-based indexes of urban quality of life. Current Issues in Urban Economics P Mieszkowski, M Straszheim 74–104 Baltimore, MD: Johns Hopkins Univ. Press
    [Google Scholar]
  68. Rosenthal SS. 2014. Are private markets and filtering a viable source of low-income housing? Estimates from a “repeat income'' model. Am. Econ. Rev. 104:2687–706
    [Google Scholar]
  69. Rossi-Hansberg E, Sarte PD, Schwartzman F. 2019. Cognitive hubs and spatial redistribution NBER Work. Pap. 26267
  70. Ruggles S, Flood S, Foster S, Goeken JP, Schouweiler M, Sobek M. 2021. IPUMS USA: Version 11.0 Data Set, Minn. Popul. Cent., Univ. Minn. Minneapolis: https://doi.org/10.18128/D010.V11.0
    [Crossref]
  71. Saiz A. 2010. The geographic determinants of housing supply. Q. J. Econ. 125:31253–96
    [Google Scholar]
  72. Shapiro J. 2006. Smart cities: quality of life, productivity, and the growth effects of human capital. Rev. Econ. Stat. 88:2324–35
    [Google Scholar]
  73. Su Y. 2022. The rising value of time and the origin of urban gentrification. Am. Econ. J. Econ. Policy 14:1402–39
    [Google Scholar]
  74. Tsivanidis N. 2019. Evaluating the impact of urban transit infrastructure: evidence from Bogotá's TransMilenio Work. Pap., Univ. Calif. Berkeley:
  75. Van Nieuwerburgh S, Weill PO. 2010. Why has house price dispersion gone up?. Rev. Econ. Stud. 77:41567–606
    [Google Scholar]
/content/journals/10.1146/annurev-economics-051420-110839
Loading
/content/journals/10.1146/annurev-economics-051420-110839
Loading

Data & Media loading...

  • Article Type: Review Article
This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error