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

Where and why do new industries emerge? Using revisions of official industrial classifications, a central contribution of this paper is to document the fraction of workers in entirely new industries, stemming directly from technological change of the 2000s. Our findings speak to a growing concern about the U.S. economy’s capacity to create new work: we show that in 2010 only 0.5 percent of the U.S. labour force worked in industries that did not exist a decade ago. When examining the determinants of employment in new industries across U.S. cities, we document that new industries emerge in places that are plentiful in skilled workers. IV estimates that exploit the location of land-grant colleges, opened in the nineteenth century, as an instrument for contemporary human capital assigns a causal interpretation to these results. JEL: J24, R11, O31, O33