The Global Value of Cities

What is the economic value of each city around the world, and what can city effects reveal about productivity, migration, and the allocation of workers across space? We study these questions using a new global dataset of job histories for 513 million workers across 220,000 locations in 191 countries. Leveraging worker moves, we implement an event-study design to estimate city earnings premia, separating place-based wage differences from worker sorting. We find that place matters substantially. Within countries, estimated city premia account for 45–73% of wage differences across cities. These estimates reveal large global disparities in the value of place. High-premium cities are larger, more industrially diverse, and allocate more workers to high-premium firms. We use these estimates to quantify the gains from reallocation. The dispersion of city effects is substantially larger in low-income countries, implying significant unrealized gains from migration. Reallocating workers across cities and firms to match the US distribution yields meaningful income gains in developing economies. Together, our results highlight the central role of location in shaping global income differences and point to spatial and within-city allocation as key barriers to development.