Connor Walsh, Columbia Business School

After 1980, larger US cities experienced substantially faster wage growth than smaller ones. We show that this urban bias mainly reflected wage growth at large Business Services firms. These firms set themselves apart through high per-worker spending on information technology capital and their disproportionate presence in big cities. We introduce a spatial model of investment-specific technical change that can rationalize these patterns. Using the model as an accounting framework, the observed decline in the investment price of information technology capital explains most urban-biased growth by raising the profits of large Business Services firms.

DATE: Friday, April 25, 2025

TIME: 3:30-5:00 p.m.

LOCATION: Fronczak 444