One may be concerned that the figure is comparing apples and oranges—that workers who pick cities with many college graduates, like Boston, might differ fundamentally from workers who pick cities with fewer college graduates, like Flint. If Boston attracts high school graduates who are smarter or more ambitious than those in Flint, it should be no surprise that they earn more. To account for this possibility, I relied on 14 years of data from the National Longitudinal Survey of Youth, which has tracked the lives of 12,000 people since 1979. This dataset is particularly useful because it ensures an apples-to-apples comparison by tracking how the salary of a given person changes over time as the number of college graduates in a city changes. The finding? Workers who live in cities where the number of college graduates increases experience faster salary gains than workers who live in cities where the number of college graduates stagnates. The same individual’s salary can thus depend on how many skilled workers are nearby. This relationship holds for all sectors, but it is especially strong for workers with high-tech jobs.<sup>10</sup> Three reasons explain the relationship between the number of skilled workers in a city and the wages of their unskilled neighbors. First, skilled and unskilled workers complement each other: an increase in the former raises the productivity of the latter. In the same way that working with better machines increases a worker’s productivity, working with better educated colleagues increases the productivity of an unskilled worker. Second, a better educated labor force facilitates local employers’ adoption of newer and better technologies. Third, an increase in a city’s overall human capital generates human capital spillovers. This concept is at the heart of modern economic growth theory, the study of what determines a country’s economic success.

Researchers have built sophisticated mathematical models showing that sharing knowledge and skills through formal and informal interaction generates significant knowledge spillovers. These spillovers are thought to be an important engine of economic growth for both cities and nations. Robert Lucas (1988), arguing that these spillovers may be large enough to explain long-run differences between rich and poor countries, showed that people learn from each other when they interact and that this process makes those who interact with better educated peers ultimately more productive and creative. More recent research has extended and articulated the concept.<sup>11</sup> New ideas are rarely born in a vacuum. Social interactions among workers tend to generate learning opportunities that enhance innovation and productivity. So the fact that workers earn more in highly educated cities is not an accident but a reflection of the higher labor productivity that comes from working alongside highly educated colleagues and neighbors.

Jaffe, Trajtenberg, and Henderson (1993) used patent citations to understand how knowledge diffuses within a circle of friends, colleagues, or scientists in a city. When filing for a patent, inventors are required to list all the inventions that their invention builds on. These links offered the economists an innovative way to track the flow of knowledge among inventors. They found that knowledge is subject to a significant degree of “home bias,” in the sense that inventors are significantly more likely to cite inventors living nearby than those living farther away. Because patents are freely available, citations should not necessarily display geographical favoritism. An 10