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Thanks Dirk and Patrick, those are both very helpful resources!

Going back to my original question, even after reviewing all of these links, it appears that this is a preference issue, and not a performance one, yes?

We are finally taking our classifieds site forward and moving into a much improved URL structure, however, there is some disagreement over whether to go with a Flat URL structure or a structured sub-directory.

I've browsed all of the posts and Q&A's for this going back to 2011, and still don't feel like I have a real answer. Has anyone tested this yet, or is there any consensus over ranking? I am in a disagreement with another SEO manager about this for our proposed URL structure redesign who is for it because it is what our competitors are doing.

Our classifieds are geographically based, and we group by state, county, and city. Most of our traffic comes from state and county based searches. We also would like to integrate categories into the URL for some of the major search terms we see. The disagreement arises around how to structure the site. I prefer the logical sub-directory style:

[sitename]/[category]/[state]/[county]/
mysite.com/for-sale/california/kern-county/
or
[sitename]/[category]/[county]-county-[stateabb]/
mysite.com/for-sale/kern-county-ca/

I don't mind the second, except for when you look at it in the context of the whole site:

Geo Landing Pages:
mysite.com/california/
mysite.com/los-angeles-ca-90210/

Actual Search Pages:
mysite.com/for-sale/orange-ca/[filters]

Detail Pages:
mysite.com/widget-type/cool-product-name/productid

I want to make sure this flat structure performs better before sacrificing my analytics sanity (and ordered logic). Any case studies, tests or real data around this would be most helpful, someone at Moz must've tackled this by now!