Cities, Matching and the Productivity Gains of Agglomeration

Simon Burgess (), Julia Lane and Fredrik Andersson

No 4598, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The striking geographical concentration of economic activities suggests that there are substantial benefits to agglomeration. The nature of those benefits remains unclear, however. In this Paper we take advantage of a new dataset to quantify the role of one of the main contenders: the matching of workers and jobs. Using individual level data for two large US states we show that thicker urban labour markets are associated with more assortative matching between workers and firms. Another critical condition is required for this to generate higher productivity: complementarity of worker and firm quality in the production function. Using establishment level productivity regressions, we show that such complementarity is found in our data. Putting together the production and matching relationships, we show that production complementarity and assortative matching is an important source of the urban productivity premium.

Keywords: Urban productivity; Matching; Agglomeration (search for similar items in EconPapers)
JEL-codes: J24 R12 R23 (search for similar items in EconPapers)
Date: 2004-09
New Economics Papers: this item is included in nep-eff and nep-geo
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Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Cities, matching and the productivity gains of agglomeration (2007)
Working Paper: Cities, Matching and the Productivity Gains of Agglomeration (2004)
Working Paper: Cities, matching and the productivity gains of agglomeration (2004)
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