Large internal wage disparities between cities are a common feature in countries around the world. Using data from Germany, this column argues that one key driver of this is rising assortative matching of high-quality workers and plants in large cities. One promising strategy to reduce spatial wage disparities is to improve matching within small cities.
Wolfgang Dauth, Sebastian Findeisen, Enrico Moretti, Jens Südekum, 06 January 2019
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