Are urban labour markets more dynamic? Vacancies and urban scaling

Abstract

This paper shows that there is superlinear scaling of vacancies with employment size. That is, there are disproportionally more vacancies relative to employment in urban areas, not just for overall employment, but also for occupational and educational classes. Hence vacancies are more strongly concentrated than the jobs to which they refer. Moreover, we find that, compared to all employment, the concentration of labour demand increases with required skill levels. We show that the stronger growth of jobs in cities is unable to explain this finding and propose an alternative explanation based on vacancy chains in spatially related labour markets. The results suggest that on-the-job searchers have better possibilities in cities to improve their position. This helps explain the higher mobility of especially younger workers in cities and the superior quality of job-worker matches in large labour markets.