This paper explores an empirical issue: the extent to which access to various labour skills and other economic activity in Los Angeles can explain observed intra-urban variations in productivity of selected manufacturing and business service sectors. In addressing this issue, an empirical model is developed based on traditional location theory and productivity methodologies. The empirical results indicate that the influence of skilled labour access on firm productivity is stronger than the influence of access to other firms in the metropolitan area. Thus, employment decentralisation is the rational response of firms to the residential choices of a skilled labour force. The findings raise questions about the mobility of labour within metropolitan areas, and the impact of policies that would improve the mobility of less skilled labour between central cities and the suburban employment centres.
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