Lawrence Katz, Ariel Pakes, and Edward Glaeser
This dissertation consists of three independent chapters all related to local labor market and urban economics. Chapter 1 studies the causes and welfare consequences of the increase in geographic sorting of workers by skill from 1980 to 2000. Chapter 2 examines the abilities of state and local governments to extract rent from private sector workers by charging high tax rates and spending the revenue on nonsocial desirable projects, such as excessive government worker wages. In Chapter 3, which is joint work with Guido Imbens, Michal Kolesar, and Thomas Barrios, we examine the standard practice in regression analysis of allowing for clustering in the error covariance matrix when the explanatory variable of interest varies at a more aggregate level (e.g., the state level) than the units of observation (e.g., individuals). This is a common econometric problem when using geographic variation to study local labor market outcomes.