Download or read book The Incidence of Local Labor Demand Shocks written by Matthew J. Notowidigdo and published by . This book was released on 2011 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: Low-skill workers are comparatively immobile: when labor demand slumps in a city, low-skill workers are disproportionately likely to remain to face declining wages and employment. This paper estimates the extent to which (falling) housing prices and (rising) social transfers can account for this fact using a spatial equilibrium model. Nonlinear reduced form estimates of the model using U.S. Census data document that positive labor demand shocks increase population more than negative shocks reduce population, this asymmetry is larger for low-skill workers, and such an asymmetry is absent for wages, housing values, and rental prices. GMM estimates of the full model suggest that the comparative immobility of low-skill workers is not due to higher mobility costs per se, but rather a lower incidence of adverse labor demand shocks.
Download or read book The Incidence of Local Labor Demand Shocks written by and published by . This book was released on 2011 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book How Effects of Local Labor Demand Shocks Vary with Local Labor Market Conditions written by Timothy J. Bartik and published by . This book was released on 2014 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper estimates how effects of shocks to local labor demand on local labor market outcomes vary with initial local economic conditions. The data are on U.S. metro areas from 1979 to 2011. The paper finds that demand shocks to local job growth have greater effects in reducing local unemployment rates if the local economy is initially depressed than if the local economy is booming. Demand shocks have greater effects on local wage rates if the local unemployment rate is initially low, but lesser effects if local job growth is initially high. These different effects of local demand shocks imply that social benefits of adding jobs are two to three times greater per job in more depressed local labor markets, compared to more booming local labor markets.
Download or read book How Long run Effects of Local Demand Shocks on Employment Rates Vary with Local Labor Market Distress written by Timothy J. Bartik and published by . This book was released on 2021 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper estimates that long-run changes in a county’s prime-age employment rate are significantly affected by labor demand shocks to both the county and its overlying commuting zone (CZ). The overall benefits of labor demand shocks are due more to CZ demand shocks than county demand shocks. A lower preexisting county employment rate increases the effects of CZ demand shocks. Simulations suggest that low prior employment rate CZs, versus higher-rate CZs, will have much larger employment rate effects from demand shocks. Targeting jobs at more distressed counties within a CZ has modest effects, much lower than the effects of targeting jobs at more distressed CZs.
Download or read book The Dynamic Effects of Local Labor Market Shocks on Small Firms in The United States written by Mr. Philip Barrett and published by International Monetary Fund. This book was released on 2024-03-22 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We use payroll data on over 1 million workers at 80,000 small firms to construct county-month measures of employment, hours, and wages that correct for dynamic changes in sample composition in response to business cycle fluctuations. We use this to estimate the response of small firms' employment, hours and wages following tighter local labor market conditions. We find that employment and hours per worker fall and wages rise. This is consistent with the predictions of the response to a demand shock in the well-known “jobs ladder” model of labor markets. To check this interpretation, we show our results hold when instrumenting for local demand using county-level Department of Defense contract spending. Correction for dynamic sample bias is important -- without it, the hours fall by only one third as much and wages increase by double.
Download or read book Aggregate Effects in Local Labor Markets of Supply and Demand Shocks written by Timothy J. Bartik and published by . This book was released on 1999 with total page 96 pages. Available in PDF, EPUB and Kindle. Book excerpt: Based on state-level labour market data from the Outgoing Rotation Group of the Current Population Survey from 1979 to 1997, discusses the wage and displacement effects of supply and demand shocks.
Download or read book Regional Labor Market Adjustments in the United States and Europe written by Mai Dao and published by International Monetary Fund. This book was released on 2014-02-11 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine patterns of regional adjustments to shocks in the US during the past 40 years. Using state-level data, we estimate the dynamic response of regional employment, unemployment, participation rates and net migration to state-relative labor demand shocks. We find that (i) the long-run effect of a state-specific shock on the state employment level has decreased over time, suggesting less overall net migration in response to a regional shock, (ii) the role of the participation rate as absorber of regional shocks has increased, (iii) the response of net migration to regional shocks is stronger, while that of relative unemployment is weaker during aggregate downturns, and (iv) the change in the response intensity of migration is related to the declining trend in regional dispersion of labor market conditions. Finally, using regional data for a set of 21 European countries, we show that while the short-term response of participation rates to labor demand shocks is typically larger in Europe than in the US, the immediate response of net migration in Europe has increased over time.
Download or read book Immigrants Equilibrate Local Labor Markets written by Brian C. Cadena and published by . This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper demonstrates that low-skilled Mexican-born immigrants' location choices in the U.S. respond strongly to changes in local labor demand, and that this geographic elasticity helps equalize spatial differences in labor market outcomes for low-skilled native workers, who are much less responsive. We leverage the wage rigidity that occurred during Great Recession to identify the severity of local downturns, and our results confirm the standard finding that high-skilled populations are quite geographically responsive to employment opportunities while low-skilled populations are much less so. However, low-skilled immigrants, primarily those from Mexico, respond even more strongly than high-skilled native-born workers. These results are robust to a wide variety of controls, a pre-recession falsification test, and two instrumental variables strategies. A novel empirical test reveals that natives living in cities with a substantial Mexican-born population are insulated from the effects of local labor demand shocks compared to those in cities with few Mexicans. The reallocation of the Mexican-born workforce among these cities reduced the incidence of local demand shocks on low-skilled natives' employment outcomes by more than 40 percent.
Download or read book Who Creates New Firms When Local Opportunities Arise written by Shai Bernstein and published by International Monetary Fund. This book was released on 2018-09-28 with total page 73 pages. Available in PDF, EPUB and Kindle. Book excerpt: New firm formation is a critical driver of job creation, and an important contributor to the responsiveness of the economy to aggregate shocks. In this paper we examine the characteristics of the individuals who become entrepreneurs when local opportunities arise due to an increase in local demand. We identify local demand shocks by linking fluctuations in global commodity prices to municipality level agricultural endowments in Brazil. We find that the firm creation response is almost entirely driven by young and skilled individuals, as measured by their level of experience, education, and past occupations involving creativity, problem-solving and managerial roles. In contrast, we find no such response within the same municipalities among skilled, yet older individuals, highlighting the importance of lifecycle considerations. These responsive individuals are younger and more skilled than the average entrepreneur in the population. The entrepreneurial response of young individuals is larger in municipalities with better access to finance, and in municipalities with more skilled human capital. These results highlight how the characteristics of the local population can have a significant impact on the entrepreneurial responsiveness of the economy.
Download or read book Regional Labor Market Adjustments in the United States written by Mai Dao and published by International Monetary Fund. This book was released on 2014-11-25 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine patterns of regional adjustments to shocks in the US during the past four decades. We find that the response of interstate migration to relative labor market conditions has decreased, while the role of the unemployment rate as absorber of regional shocks has increased. However, the response of net migration to regional shocks is stronger during aggregate downturns and increased particularly during the Great Recession. We offer a potential explanation for the cyclical pattern of migration response based on the variation in consumption risk sharing.
Download or read book Redistribution of Local Labor Market Shocks Through Firms Internal Networks written by Xavier Giroud and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Local labor market shocks are difficult to insure against. Using confidential micro data from the U.S. Census Bureau's Longitudinal Business Database, we document that firms redistribute the employment impacts of local demand shocks across regions through their internal networks of establishments. During the Great Recession, the massive decline in house prices caused a sharp drop in consumer demand, leading to large employment losses in the non-tradable sector. Consistent with firms smoothing out the impacts of these shocks across regions, we find large elasticities of non-tradable establishment-level employment with respect to house prices in other counties in which the firm has establishments. At the same time, establishments of firms with larger regional networks exhibit lower employment elasticities with respect to local house prices in the establishment's own county. To account for general equilibrium adjustments, we aggregate non-tradable employment at the county level. Similar to what we found at the establishment level, we find that non-tradable county-level employment responds strongly to local demand shocks in other counties linked through firms' internal networks. These results are not driven by direct demand spillovers from nearby counties, common shocks to house prices, or local demand shocks affecting non-tradable employment in distant counties indirectly via the trade channel. Our results suggest that firms play an important role in the extent to which local labor market risks are shared across regions.
Download or read book Essays on the Economics of Local Labor Markets written by Matt Notowidigdo and published by . This book was released on 2010 with total page 226 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis studies the economics of local labor markets. There are three chapters in the thesis, and each chapter studies how economic outcomes are affected by local labor market conditions. The first chapter studies the incidence of local labor demand shocks. This chapter starts from the observation that low-skill workers are comparatively immobile. When labor demand slumps in a city, college-educated workers tend to relocate whereas non college workers are disproportionately likely to remain to face declining wages and employment. A standard explanation of these facts is that mobility is more costly for low-skill workers. This chapter proposes and tests an alternative explanation, which is that the incidence of adverse shocks is borne in large part by (falling) real estate rental prices and (rising) social transfers. These factors reduce the real cost of living differentially for low-income workers and thus compensate them, in part or in full, for declining labor demand. I develop a spatial equilibrium model which, appropriately parameterized, identifies both the magnitude of unobserved mobility costs by skill and the shape of the local housing supply curve. Nonlinear reduced form estimates using U.S. Census data document that positive labor demand shocks increase population more than negative shocks reduce population, that this asymmetry is larger for lows kill workers, and that such an asymmetry is absent for wages, housing values, and rental prices. Estimates of the full model using a nonlinear, simultaneous equations GMM estimator suggest that (1) the asymmetric population response is primarily accounted for by an asymmetric housing supply curve, (2) the differential migration response by skill is primarily accounted for by transfer payments, and (3) estimated mobility costs are at most modest and are comparable for high-skill and low-skill workers, suggesting that the primary explanation for the comparative immobility of low-skilled workers is not higher mobility costs per se, but rather a lower incidence of adverse labor demand shocks. The second chapter, written jointly with Daron Acemoglu and Amy Finkelstein, studies how local area health spending responds to permanent changes in local area income. This chapter is motivated by the fact that health expenditures as a share of GDP have more than tripled over the last half century, and a common conjecture is that this is primarily a consequence of rising real per capita income, which more than doubled over the same period. We investigate this hypothesis empirically by instrumenting for local area income with time-series variation in global oil prices between 1970 and 1990 interacted with cross-sectional variation in the oil reserves across different areas of the Southern United States. This strategy enables us to capture both the partial equilibrium and the local general equilibrium effects of an increase in income on health expenditures. Our central estimate is an income elasticity of 0.7, with an elasticity of 1.1 as the upper end of the 95 percent confidence interval. Point estimates from alternative specifications fall on both sides of our central estimate, but are almost always less than 1. We also present evidence suggesting that there are unlikely to be substantial national or global general equilibrium effects of rising income on health spending, for example through induced innovation. Our overall reading of the evidence is that rising income is unlikely to be a major driver of the rising health share of GDP. The third chapter, written jointly with Kory Kroft, studies theoretically and empirically how optimal Unemployment Insurance (UI) benefits vary with local labor market conditions. Theoretically, we derive the relationship between the moral hazard cost of UI and the unemployment rate in a standard search model. The model motivates our empirical strategy which tests whether the effect of UI benefits on unemployment durations varies with the local unemployment rate. In our preferred specification, a one standard deviation increase in the local unemployment rate reduces the magnitude of the duration elasticity by 32%. Using this estimate to calibrate the optimal level of UI benefits, we find that a one standard deviation increase in the unemployment rate leads to a 6.4 percentage point increase in the optimal replacement rate. JEL classification: J61, 110, J65.
Download or read book Measuring Local Job Distress written by Timothy J. Bartik and published by . This book was released on 2021 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, estimates are presented on short-run effects of demand shocks on a local labor market’s employment to population ratio (employment rate). Based on the estimates, commuting zones (CZs) better define a local labor market than counties, because both employment and employment rate effects exhibit large spillovers across counties within a CZ. In addition, the estimates suggest that demand shock effects vary, by an amount that is both statistically and substantively significant, with a CZ’s prior overall employment rate.
Download or read book Are Shocks to Labor Demand Transitory Or Persistent Evidence from Labor Flows and Wages written by Martha Starr-McCluer and published by . This book was released on 1993 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Response of Wages and Labor Supply Movements to Employment Shocks Across Europe and the United States written by Mr.Alun H. Thomas and published by International Monetary Fund. This book was released on 1994-12 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper assesses the responsiveness of wages and labor force movements to employment shocks across British and U.S. regions and across Europe using a multivariate vector autoregression technique. The paper finds inflexible real wages in all three areas in that each area’s real wage responds very little to employment shocks. However, the response of the labor force to employment shocks is much greater in the United States compared to Europe. The strong labor force response in the United States prevents any persistence in relative regional unemployment rates whereas the lack of mobility in Europe results in persistent unemployment rate differentials across British regions and European nations. Europe must therefore adopt measures to reduce barriers to immobility if it is to succeed in moderating the persistence in relative unemployment rates.
Download or read book Local Labor Market Shocks and Earnings Differentials written by Gregory Upton and published by . This book was released on 2019 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We show that a labor demand shock to specific workers (male workers with high school education) in a specific industry (oil and gas sector) can significantly impact earnings differentials within sectors not directly impacted by the productivity shock. Specifically, we estimate that areas impacted by the shale boom experienced a 3% decrease (2.7% increase) in the high-/low-skilled (male/female) earnings differential relative to unaffected areas. The corresponding effects on employment differentials are -4.4% and 3.7%, respectively. These effects are also observed within sectors not directly impacted by the boom. Results highlight the importance of considering the differential effects of technology shocks by education and gender in studying earnings inequality.
Download or read book The Role of Local Labor and Housing Markets in Regional Economic Adjustment written by Peter J. Brady and published by . This book was released on 1996 with total page 342 pages. Available in PDF, EPUB and Kindle. Book excerpt:
