Human Capital Sorting - the ‘when’ and ‘who’ of sorting of talents to urban regions

Sorting of high-ability workers is a main source of urban-rural disparities in economic outcomes. Less is known about when such human capital sorting occurs and who it involves. Using data on 15 cohorts of university graduates in Sweden, we demonstrate significant sorting to urban regions on high school grades and education levels of parents, i.e. two attributes typically associated with latent abilities that are valued in the labor market. A large part of this sorting occurs already in the decision of where to study, because top universities are predominantly located in urban regions. Estimates from a selection model show that even after controlling for sorting prior to labor market entry, the ‘best and brightest’ are still more likely to start working in urban regions, and are also more likely to remain there over long time periods. We conclude that a) urban regions are true magnets for high-ability graduates, and that b) studies of human capital sorting need to account for selection processes to and from universities, because neglecting mobility prior to labor market entry is likely to lead to underestimation of the extent of sorting to urban regions.