Productivity in cities: self-selection and sorting
Anthony J. Venables
Abstract
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: economic geography, productivity, city, urban, sorting, self-selection
Date: October 2010 | Reference number(s): 507
Series: Department of Economics Discussion Paper Series
JEL Classifications: R0, R1