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...

This paper provides some evidence that the division of labour is limited by the extent of the (local) market. We first propose a theoretical model. Its main prediction is that scarce occupations are over-represented in large cities. Using census data for French cities, we then provide strong...

Large cities produce more output per capita than small cities. This may occur because more talented individuals sort into large cities, because large cities select more productive entrepreneurs and firms, or because of agglomeration economies. We develop a model of systems of cities that...

This paper uses two recent UK surveys to investigate labour market performance, the determinants of language proficiency, and the effect of language on earnings and employment probabilities of non-white immigrants. Our results show that language acquisition, employment probabilities, as well as...

In this paper we document a strong positive correlation of immigration flows with changes in average wages and average house rents for native residents across U.S. states. Instrumental variables estimates reveal that the correlations are compatible with a causal interpretation from immigration...

Despite convergence pressures, differences in housing and financial market institutions across the 15 member states of the European Union are still enormous. This paper argues that they have profound effects on the responsiveness of output and inflation in the different countries to changes in...

Typically, a small and open economy trades goods at given world prices. Here, we present a model of a very open small economy, where capital and labour are internationally mobile, too. When investing into infrastructure, the economy’s government attracts not only mobile capital but mobile...

Pre-harvest lean seasons are widespread in the agrarian areas of Asia and Sub-Saharan Africa. Every year, these seasonal famines force millions of people to succumb to poverty and hunger. We randomly assign an $8.50 incentive to households in Bangladesh to out-migrate during the lean season, and...

Crime has been argued to have important externalities. We investigate the relationship between violent crime and an important type of behaviour: individuals’ participation in their local area through walking and physical activity. We use a sample of nearly 1 million people residing in over 320...

We propose an integrated framework to discuss the empirical literature on the local determinants of agglomeration effects. We start by presenting the theoretical mechanisms that ground individual and aggregate empirical specifications. We gradually introduce static effects, dynamic effects, and...