Essays in regional and labor economics

Abstract

Over the past decades, skilled and unskilled households in Western economies have been making increasingly different location choices. College graduates cluster in dense, urban regions to a considerably larger extent than high school graduates. This thesis tries to make progress in understanding the driving forces behind the diverging location choices of different groups of workers and their implications for regional disparities, policies and welfare. It consists of three self-contained essays that investigate the causes and consequences of geographic worker sorting using highly disaggregated microdata for Germany. Chapter 1 examines to what extent regional disparities in housing costs drive geographic worker sorting by skill. It further analyzes how place-based policies optimally respond to the observed trends. Chapters 2 and 3 investigate the effects of sorting by skill and demographics on regional wage disparities.