The Financial Services Sector and Cities: Restructuring, Decentralization, and Declining Urban Employment

Abstract

Financial services industries have been an important source of central-city employment, including new jobs. Although decentralization occurred in the 1970s and 1980s, widespread national growth in the sector generally resulted in central-city employment gains. In the 1990s, despite continuing national growth in the sector overall, financial services became a key source of job losses in many cities. From 1991 to 1996, financial services employment declined by 5% in a sample of 40 large cities but increased by 9% in corresponding suburbs. Twenty-five of these cities lost finance jobs, with losses exceeding 10% in 11 cities. Moreover, financial services were often a disproportionate contributor to total employment losses. This article describes these trends and explores the relationship between industrial structure, city size, and region on the suburbanization of financial services employment.