Thick-market effects and churning in the labor market: evidence from U.S. cities

Hoyt Bleakley () and Jeffrey Lin

No 07-23, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: Using U.S. Census microdata, the authors show that, on average, workers change occupation and industry less in more densely populated areas. The result is robust to standard demographic controls, as well as to including aggregate measures of human capital and sectoral mix. Analysis of the displaced worker surveys shows that this effect is present in cases of involuntary separation as well. On the other hand, the authors actually find the opposite result (higher rates of occupational and industrial switching) for the subsample of younger workers. These results provide evidence in favor of increasing-returns-to-scale matching in labor markets. Results from a back-of-the-envelope calibration suggest that this mechanism has an important role in raising both wages and returns to experience in denser areas.

Keywords: Labor; market (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo, nep-lab and nep-ure
Date: 2007
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