Recent Findings from Federal Reserve Bank Provides New Insights into Economics (The Geography of Business Dynamism and Skill-biased Technical Change): Economics

2025 SEP 25 (NewsRx) -- By a News Reporter-Staff News Editor at Economics Daily Report -- Current study results on Economics have been published. According to news reporting originating in St. Louis, Missouri, by NewsRx editors, the research stated, “This paper shows that the growing disparities between big and small cities in the U.S. since 1980 can be explained by firms endogenously responding to a skill-biased technology shock.”

Financial supporters for this research include International Economics Section (IES), Simpson Center for the Study of Macroeconomics.

The news reporters obtained a quote from the research from Federal Reserve Bank, “With the introduction of a new skill-biased technology that is high fixed cost but low marginal cost, firms endogenously adopt more in big cities, cities that offer abundant amenities for high-skilled workers, and cities that are more productive in using high-skilled labour. In cities with more adoption, small and unproductive firms are more likely to exit the market, increasing the equilibrium rate of turnover or business dynamism-a selection effect similar to Melitz (2003).”

According to the news reporters, the research concluded: “Differences in technology adoption and selection account for three key components of the growing regional disparities, known as the Great Divergence: (1) big cities saw a larger increase in the relative wages and supply of skilled workers, (2) big cities saw a smaller decline in business dynamism, and (3) firms in big cities invest more intensively in information and communication technology.”

This research has been peer-reviewed.

For more information on this research see: The Geography of Business Dynamism and Skill-biased Technical Change. Review of Economic Studies, 2025. Review of Economic Studies can be contacted at: Oxford Univ Press, Great Clarendon St, Oxford OX2 6DP, England. (Oxford University Press - http://www.oup.com/; Review of Economic Studies - restud.oxfordjournals.org)

Our news correspondents report that additional information may be obtained by contacting Hannah Rubinton, Federal Reserve Bank, St. Louis, MO 63102, United States.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1093/restud/rdaf063. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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