Housing Booms, Manufacturing Decline and Labour Market Outcomes

Kerwin Kofi Charles, Erik Hurst and Matthew Notowidigdo

The Economic Journal, 2019, vol. 129, issue 617, 209-248

Abstract: We study how manufacturing decline and local housing booms contributed to changes in labour market outcomes during the 2000s, focusing on the distributional consequences across geographical areas and demographic groups. Using a local labour markets design, we estimate that manufacturing decline significantly reduced employment between 2000 and 2006, while local housing booms increased employment. These results suggest that housing booms ‘masked’ employment declines that would have occurred earlier in the absence of the booms. This ‘masking’ occurred both within and between cities and demographic groups. We find that roughly 40% of the reduction in employment during the 2000s can be attributed to manufacturing decline and that these negative effects would have appeared earlier had it not been for the large, temporary increases in housing demand.

Date: 2019
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Working Paper: Housing Booms, Manufacturing Decline, and Labor Market Outcomes (2013)
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