While the productivity gains associated with the geographic concentration of industry
(i.e. localization) are by now well-documented, little work has considered how
those gains are distributed across individual workers. This paper offers evidence on
the connection between total employment and the relative wage earnings of high- and
low-skill workers (i.e. inequality) within two-digit manufacturing industries across the
states and a collection of metropolitan areas in the U.S. between 1970 and 1990. Using
measures of overall, between-education-group, and residual inequality, I find that wage
dispersion falls significantly as industry employment expands.