DP14434 Cities, Lights, and Skills in Developing Economies

Author(s): Donald R Davis, Jonathan Dingel, Antonio Miscio
Publication Date: February 2020
Keyword(s): cities, Metropolitan areas, satellite images, skill-biased agglomeration, Zipf's law
JEL(s): C8, O1, O18, R1
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14434

In developed economies, agglomeration is skill-biased: larger cities are skill-abundant and exhibit higher skilled wage premia. This paper characterizes the spatial distributions of skills in Brazil, China, and India. To facilitate comparisons with developed-economy findings, we construct metropolitan areas for each of these economies by aggregating finer geographic units on the basis of contiguous areas of light in nighttime satellite images. Our results validate this procedure. These lights-based metropolitan areas mirror commuting-based definitions in the United States and Brazil. In China and India, which lack commuting-based definitions, lights-based metropolitan populations follow a power law, while administrative units do not. Examining variation in relative quantities and prices of skill across these metropolitan areas, we conclude that agglomeration is also skill-biased in Brazil, China, and India.