Skills and the City in China

This paper examines spatial allocation and urban wage premiums of skills in China by leveraging a comprehensive dataset that includes several waves of population censuses and nationally representative surveys. Our finding indicates an increasing concentration of occupations requiring high levels of cognitive tasks in large cities, and individuals with higher cognitive skills receive larger urban wage premiums. We also present evidence on the improved quality of matching between jobs and skills as well as enhanced learning in large cities. However, we find no urban wage premium for workers with higher levels of individual social skills, which differs from patterns observed in developed countries. We examine this discrepancy in light of market imperfections and provide suggestive evidence that social skills may help promote opportunistic behaviors in weak institutional environments