Industrial reallocation across US cities, 1977-1997

Between 1977 and 1997, US employment shifted dramatically in favor of industries that used skilled labor intensively. During this same period, some cities withered while others prospered. This paper examines employment growth in 39 industries across 316 cities to evaluate the importance of learning by doing, industry-specific location fundamentals, human capital externalities, and hiring cost explanations in these geographic shifts. Growth in industries that used skill intensively was particularly sensitive to the presence of local human capital. That growth was almost always negatively related to the initial size of the industry within the city implies a limited role for learning by doing and industry-specific location fundamentals stories. (C) 2004 Elsevier Inc. All rights reserved.