The comparative advantage of cities

Abstract What determines the distributions of skills, occupations, and industries across cities? We develop a theory to jointly address these fundamental questions about the spatial organization of economies. Our model incorporates a system of cities, their internal urban structures, and a high-dimensional theory of factor-driven comparative advantage. It predicts that larger cities will be skill abundant and specialize in skillintensive activities according to the monotone likelihood ratio property. We test the model using data on 270 US metropolitan areas, 3 to 9 educational categories, 22 occupations, and 21 manufacturing industries. The results provide support for our theory's predictions. * We thank Corinne Low, Joan Monras, Keeyoung Rhee, Bernard Salanie, Daniel Sturm, and attendees of the Columbia international trade colloquium and international economics workshop for helpful comments