| There have been several pronounced trends in cities across the U.S. over the last two decades. First, skill levels are diverging. Cities like Boston, with a higher initial share of college graduates, have had a greater subsequent increase in measurable skill levels. Second, these cities have also undergone faster growth in land prices, compared to other cities. In addition, the patterns of inter-city migration have changed. Cities like Boston used to attract both skilled and unskilled workers, but unskilled workers have been moving out of these cities, while skilled workers have continued to move in. The argument in this thesis is that the advent of new technologies may, in part, explain the observed changes, through an increase in the possibility of domestic outsourcing and computerization.; On the empirical front, this thesis provides evidence of domestic outsourcing and computerization. It presents stylized facts on city housing prices, skill levels, and skill premiums. In addition, changes in migration patterns by skill are examined.; On the theoretic front, this thesis presents models that rationalize the observed facts. The key idea is that skilled workers need unskilled support services. Before the advent of the new technologies, skilled workers in cities like Boston must hire expensive local unskilled workers. With the new technologies, skilled workers can use computers instead or hire inexpensive unskilled workers in cities like Omaha, Nebraska. This thesis shows that the obsolescence or shuffling of unskilled jobs can affect the location of people as well as city characteristics. |
