Productivity in Cities: Self-Selection and Sorting
17 Pages Posted: 22 Nov 2010
Date Written: October 2010
Productivity is high in cities partly because the urban environment acts as a self-selection mechanism. If workers have imperfect information about the quality of workers with whom they match and matches take place within cities, then high-ability workers will choose to live and work in expensive cities. This self-selection improves the quality of matches in such cities. The mechanism may be reinforced by the development of informational networks in cities with a large proportion of high ability workers. As a consequence productivity in these cities is high for workers of all ability types.
Keywords: city, economic geography, productivity, self-selection, sorting, urban
JEL Classification: R0, R1
Suggested Citation: Suggested Citation