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The Rise and Fall of Urban EconomiesLessons from San Francisco and Los Angeles$
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Michael Storper, Thomas Kemeny, Naji Makarem, and Taner Osman

Print publication date: 2015

Print ISBN-13: 9780804789400

Published to Stanford Scholarship Online: May 2016

DOI: 10.11126/stanford/9780804789400.001.0001

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The Role of Labor in Divergence

The Role of Labor in Divergence

Quality of Workers or Quality of Jobs?

(p.51) 4 The Role of Labor in Divergence
The Rise and Fall of Urban Economies

Michael Storper

Thomas Kemeny

Naji Philip Makarem

Taner Osman

Stanford University Press

Differences in average regional wages between San Francisco and Los Angeles increased from 5 percent in 1970 to 35 percent in 2010. Wage gaps are due partially to increasing differences in the skills of the labor force but are proportionally greater than the increase in skills gaps. Skills gaps themselves must also be explained. Do they emerge as different kinds of people migrate or stay according to different kinds of jobs created in the two regions? Or is it the reverse: people go to the two regions in search of lifestyle amenities and housing, and the two economies diverge by absorbing different kinds of people? This is the key debate in urban labor economics. This chapter shows that the key force in drawing different kinds of labor was an increasing gap in the types of employment available, itself driven by differences in regional economic specialization.

Keywords:   wage divergence, wages and skills, wages and immigration, immigration and skills, immigration and education, immigration and housing, wage premiums, geography of jobs, specialization and employment

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