Industrial Renewal in the 21st Century: Evidence from U.S. Cities

23 November 2015

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Where and why do new industries emerge? Using revisions of official industrial classifications, this paper documents the appearance of new industries between 2000 and 2010 in the U.S. economy, stemming directly from technological advances.
Examining differences in new industry creation across cities, we show that new industries mainly emerge in places that are plentiful in skilled workers. IV estimates that exploit the location of nineteenth-century land-grant colleges as an instrument for contemporary differences in human capital assigns a causal interpretation to these results.