Local Labor Markets and Human Capital Investments

Russell Weinstein

No 10598, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: I study whether human capital investments are based on local rather than national demand, and whether this is explained by migration or information frictions. I analyze three sector-specific shocks with differential local effects, including the dot-com crash, the 2008 financial crisis, and a shock transforming Delaware into an international financial center. I find universities in areas more exposed to sectoral shocks experience greater changes in sector-relevant majors. Using rich student-level data, I find this is not explained by information frictions, but more likely by migration frictions. The results suggest encouraging human capital investments based on national demand may increase mismatch.

Keywords: information frictions; migration frictions; local labor markets; college major choice (search for similar items in EconPapers)
JEL-codes: I20 J24 R12 (search for similar items in EconPapers)
Pages: 82 pages
Date: 2017-02
New Economics Papers: this item is included in nep-lma and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Forthcoming - forthcoming in: Journal of Human Resources

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Journal Article: Local Labor Markets and Human Capital Investments (2022)
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