Abstract

http://ssrn.com/abstract=609882
 
 

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Cities, Matching and the Productivity Gains of Agglomeration


Fredrik Andersson


Office of the Comptroller of the Currency (OCC)

Simon M. Burgess


University of Bristol - Department of Economics; University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO); Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Julia Lane


American Institutes for Research; Institute for the Study of Labor (IZA)

September 2004

CEPR Discussion Paper No. 4598

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 labor 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.

Number of Pages in PDF File: 43

Keywords: Urban productivity, matching, agglomeration

JEL Classification: J24, R12, R23

working papers series





Date posted: October 25, 2004  

Suggested Citation

Andersson, Fredrik and Burgess, Simon M. and Lane, Julia, Cities, Matching and the Productivity Gains of Agglomeration (September 2004). CEPR Discussion Paper No. 4598. Available at SSRN: http://ssrn.com/abstract=609882

Contact Information

Per Fredrik Daniel Andersson
Office of the Comptroller of the Currency (OCC) ( email )
400 7th St. SW
Washington, DC 20219-0001
United States
202-649-5528 (Phone)
571-465-3246 (Fax)
Simon Burgess (Contact Author)
University of Bristol - Department of Economics ( email )
8 Woodland Road
Bristol BS8 ITN
United Kingdom
+44 117 928 8436 (Phone)
+44 117 928 8577 (Fax)
HOME PAGE: http://www.bris.ac.uk/Depts/Economics/department/profiles/burgess.htm
University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO)
12 Priory Road
Bristol BS8 1TN
United Kingdom
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
Julia Lane
American Institutes for Research ( email )
1990 K Street, NW
Washington, DC 20006-1107
United States
Institute for the Study of Labor (IZA) ( email )
P.O. Box 7240
Bonn, D-53072
Germany
HOME PAGE: http://www.iza.org
Feedback to SSRN


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References:  30
Citations:  15

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