The Skill Composition of U.S. Cities

32 Pages Posted: 9 Mar 2011

See all articles by Lutz Hendricks

Lutz Hendricks

UNC Chapel Hill; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: February 24, 2011


This article explores why the fraction of highly educated workers varies across U.S. metropolitan areas. It documents a set of facts that pose challenges for a number of theories. Notably, (i) cities are characterized by industry neutral differences in skilled labor productivity and (ii) the size of the business services sector is strongly correlated with cities' skill compositions. Motivated by these observations, I propose an input sharing model, in which nontraded business services complement skilled labor. I show that the model accounts for all of the empirical regularities documented in the article.

Suggested Citation

Hendricks, Lutz, The Skill Composition of U.S. Cities (February 24, 2011). International Economic Review, Vol. 52, Issue 1, pp. 1-32, 2011, Available at SSRN: or

Lutz Hendricks (Contact Author)

UNC Chapel Hill ( email )

Chapel Hill, NC 27599
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679

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