We investigate the role of skill complementarities in production and mobility across cities. The nature of the complementarities determines the equilibrium skill distribution across cities. With extreme-skill complementarity, the skill distribution has thicker tails in large cities; with top-skill complementarity, there is first-order stochastic dominance. Using wage and housing price data, we find robust evidence of thick tails in large cities: large cities disproportionately attract both high-and lowskilled workers, while average skills are constant across city size. This pattern of spatial sorting is consistent with extreme-skill complementarity, where the productivity of high-skilled workers and of the providers of low-skilled services are mutually enhanced. If I can make it there I'll make it anywhere. ðFrank Sinatra, "New York, New York"Þ Rock Bottom, yeah I see you, all my Detroit people. ðEminem, "Welcome 2 Detroit"Þ We are grateful to numerous colleagues for detailed discussion and insightful comments. We also benefited from the feedback of many seminar audiences. Eeckhout gratefully acknowledges support by the European Research Council, grant 208068, and Schmidheiny

Swiss metropolitan areas are comprised of a system of communities with considerable fiscal autonomy. This study investigates how the income tax differentials across communities in an urban area affect the households` location decisions. Data from the urban agglomeration of Basel for the year 1997 is used. This unique data set contains tax information from all households that moved either within the city center of Basel or from the city center to the outskirts. The community choice of the households is investigated within the framework of the random utility maximization model (RUM). A theoretical model with progressive income taxation is developed to identify the household preferences applied in the RUM. Different econometric spezifications of the error term structure, such as conditional logit, nested logit and multinomial probit are compared. The empirical results show that rich households are significantly and substantially more likely to move to low-tax communities than poor households.

The geographic concentration of economic activity occurs because transport costs for goods, people and ideas give individuals and organisations incentives to locate close to each other. Historically, all of these costs have been falling. Such changes could lead us to predict the death of distance. This paper is concerned with one aspect of this prediction: the impact that less costly communication and transmission of information might have on cities and the urban structure. We develop a model which suggests that improvements in ICT will increase the dispersion of economic activity across cities making city sizes more uniform. We test this prediction using cross country data and find empirical support for this conclusion.

Low corporate taxes can help attract new …rms. This is the main mechanism underpinning the standard 'race-to-the-bottom'view of tax competition. A recent theoretical literature has quali…ed this view by formalizing the argument that agglomeration forces can reduce …rms' sensitivity to tax di¤erentials across locations. We test this proposition using data on …rm startups across Swiss municipalities. We …nd that, on average, high corporate income taxes do deter new …rms, but that this relationship is signi…cantly weaker in the most spatially concentrated sectors. Location choices of …rms in sectors with an agglomeration intensity at the twentieth percentile of the sample distribution are estimated to be twice as responsive to a given di¤erence in local corporate tax burdens as …rms in sectors with an agglomeration intensity at the eightieth percentile. Hence, our analysis con…rms the theoretical prediction: agglomeration economies can neutralize the impact of tax di¤erentials on …rms'location choices.JEL Classi…cation: R3, H32