Agglomeration and job matching among college graduates

• We study job matching as a potential source of urban agglomeration economies.
• We construct two direct measures of job matching.
• Larger and thicker local labor markets help college graduates find better jobs.
• College graduates with better job matches earn higher wages.
• Better job matching among college graduates contributes to aggregate urban productivity.

We examine job matching as a potential source of urban agglomeration economies. Focusing on college graduates, we construct two direct measures of job matching based on how well an individual's job corresponds to their college education. Consistent with matching-based theories of urban agglomeration, we find evidence that larger and thicker local labor markets increase both the likelihood and quality of a job match for college graduates. We then assess the extent to which better job matching of college-educated workers increases individual-level wages and thereby contributes to the urban wage premium. We find that college graduates with better job matches do indeed earn higher wages on average, though the contribution of such job matching to aggregate urban productivity appears to be relatively modest.