Why Children Born in Big Cities Earn More As Adults

 

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Just being born in a big city has a positive effect on later-life wages, new research finds.

For the world’s cities, the advantages of size have only grown. Big, superstar cities attract more talent and have higher rates of productivity and innovation than smaller cities. And the people who work in these cities tend to make more money. But does simply being born in a big city confer a lifelong advantage?

That’s the question at the heart of a new study published in the Journal of Urban Economics. In the study, economists Clément Bosquet of the University of Cergy-Pontoise in France and Henry G. Overman of the London School of Economics use detailed data from the British Household Panel Survey to track the connection between the size of an individual’s birth city in Britain and their earnings as a working adult. The minimum sample (after cleaning) is 7,500 individuals aged 16 and older, interviewed multiple times from 1991 to 2009.

What they find: The size of one’s birth city does have a sizable effect on later-life earnings. Technically speaking, the elasticity of wages with respect to the size of birthplace is 4.2 percent—two-thirds of the elasticity with respect to current city size (6.8 percent). That’s a pretty big effect. For example, controlling only for demographic characteristics like age and gender, a person born London in 1971 will make, on average, 6.6 percent more than someone born in Manchester and 9.3 percent more than someone born in Liverpool.

There are several ways in which the size of the city where we’re born can affect our future earnings. For one, bigger cities may boost life chances because they have more amenities, a greater choice of schools, more neighborhood options, larger social networks, and access to more role models and mentors. There is an ever-larger body of research (such as that by Raj Chetty) on how the places where we grow up shape our economic mobility. Sociologists including William Julius Wilson and Patrick Sharkey have documented how less advantaged neighborhoods perpetuate chronic concentrated poverty.

Or it could be that bigger cities attract more advantaged families. We know that the sorting of people by income and education has become more and more pronounced in recent years. If people tend to stay in their hometowns, then those from big cities are born with an advantage that those from small towns have a hard time gaining access to.

Indeed, a raft of recent studies document the substantial decline in geographic mobility in the United States and other advanced nations. Around 44 percent of people in Bosquet and Overman’s study had only ever worked in the city where they were born. For people with no more education than a General Certificate of Secondary Education (a set of exams taken at age 15 or 16), the share was higher, 48 percent.

The effect of birthplace-city size is larger for stayers than for movers, according to the study. And children from big cities, when they do move, tend to move to other relatively big cities. In either case, they continue to benefit from a higher urban wage premium.

Children from big cities are also more likely to be born to professional parents. In the British data, Bosquet and Overman find that 79 percent of children born to parents in professional occupations are born in a city, compared to 72 percent of those with parents in other occupations. On average, children with parents in professional occupations are born in cities 50 percent larger than kids with other-occupied parents.

Education plays an even larger role than occupation in determining life outcomes. Kids born in big British cities are more likely to have more educated parents and to access better education—but that connection basically disappears when the study controls for the socioeconomic backgrounds of parents. The key mechanism at work is that more educated parents already tend to sort themselves into big cities. As the authors put it, “birthplace size is linked to parental social class, so that some of the link between wages and birthplace size is explained by the sorting of parents.”

All in all, the study documents the considerable and lifelong economic advantages that come from being born in a big city. The divide between superstar cities and the rest goes far deeper than the here and now: It helps determine the life course of future generations.

CityLab editorial fellow Claire Tran contributed research and editorial assistance to this article.

Richard Florida is a co-founder and editor at large of CityLab and a senior editor at The Atlantic.

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