Dauth, WolfgangWolfgangDauth0000-0002-4269-6910Findeisen, SebastianSebastianFindeisenMoretti, EnricoEnricoMorettiSüdekum, JensJensSüdekum2022-02-092022-02-0920221542-47741542-4766https://fis.uni-bamberg.de/handle/uniba/53190Using administrative German data, we show that large cities allow for a more efficient matching between workers and firms and this has important consequences for geographical inequality. Specifically, the match between high-quality workers and high-quality plants is significantly tighter in large cities relative to small cities. Wages in large cities are higher not only because of the higher worker quality but also because of a stronger assortative matching. Strong assortative matching in large cities magnifies wage differences caused by worker sorting, and is a key factor in explaining the growth of geographical wage disparities over the last three decades. (JEL: R11, R12)eng-330article10.1093/jeea/jvac004