9 these cities, the employment in tradables is neither too low nor too high, implying a relatively balanced distribution of employment between tradables and non-tradables. Unsurprisingly, 8 of the 13 neutral mega cities are capital cities, where the government sector generates substantial employment in urban non-tradables.

Finally, we show how, for a given size, cities in Latin America and the Caribbean (LAC) have experienced sectoral employment changes over time.<sup>12</sup> We use FUA data for 8 countries to estimate the mean population-weighted urban employment share of tradables for the whole region and the periods “pre-1980” (obs. from 1962 to 1982; mean = 1978), “early 1990s” (1990-1994; 1991) and “c. 2010” (2001-2012;2009). As seen in Figure 3, employment in tradables (MFG+FIRE) has been declining over time. The evolution of LAC’s urban system was driven by its largest cities, as the decline at the “top” is 15 percentage points. Large LAC cities have thus increasingly become consumption cities.<sup>13</sup>

**Robustness.** We obtain similar results if we (Web Appx. Section B): (i) include the square, cube, and perfect fourth of the urban share, and their interactions with the population dummies, in case there are non-linearities; (ii) use log per capita GDP instead of the urban share or control for the urban definition used by each country;<sup>14</sup> (iii) compare the raw (i.e. non-residualized) employment shares; (iv) use other weights or ignore them; (v) consider other classifications for the population dummies; and (vi) study urban non-tradables or informal employment. Since our residuals are estimated _relative to_ similar cities in the world, we may worry that adding more countries to the analysis could change the results. However, our sample captures close to three-fourths of the world’s urban population, which limits such possibility. Results are also very similar if we use the raw shares.

To conclude, _ceteris paribus_ cities dramatically vary in their sectoral composition across the world. Theil decompositions suggest that half of the variation comes from differences across countries, implying an important role for aggregate structural change.

sector. While some cities are production cities because of their high MFG shares (e.g., Guangzhou and Ho Chi Minh), other production cities have high shares of FIRE (e.g., Bangalore and Paris).

> 12Indeed, only the LAC sample has good coverage over several decades in IPUMS.

> 13Additional analysis (not shown but available upon request) shows that this evolution was driven by declines in the relative urban employment shares of MFG, not FIRE.

> 14In the appendix, we discuss why results should not depend on the use of different urban definitions. Relatedly, while the urban classification is not stable across countries and years, we do not use the population density of the administrative units to select urban observations. Some rural areas of the world have particularly high density, for example in Bangladesh, Burundi, Haiti and Rwanda, which are some of the densest _and_ least urbanized countries in the world. Other areas of the world are undoubtedly urban despite their low density, in particular sprawling suburban cities (e.g., many million-plus U.S. cities).