Superstar Firms and Regional Disparities

Grant description:

This project investigates the relationship between two trends: the significant rise in regional inequality in the United States, with a small number of highly educated urban cities accounting for a growing share of national income, and the increasing dominance of large, multiregion services firms such as Amazon.com Inc., Walmart Inc., and Starbucks Corp., as reflected in measures of average firm size and market concentration. These “superstar” firms create high-paying, high-skill jobs in large cities and low-paying jobs in nonurban areas across the country, displacing local and regional competitors in the process and leading to increasingly unequal demand for skills across regions. Kleinman will utilize private data from Dun and Bradstreet and Burning Glass Technologies, as well as public data from the American Community Survey and the Panel Database on Incentives and Taxes. He will combine an empirical investigation of the relationship between firms’ spatial expansion and regional inequality with the development and quantification of a novel economic geography model that features expansion of multiregion firms to analyze the labor demand of firms across different markets and occupations.