The Incidence of Local Labor Demand Shocks

Matthew Notowidigdo

No 17167, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

JEL-codes: H53 J01 R31 (search for similar items in EconPapers)
Date: 2011-06
New Economics Papers: this item is included in nep-geo, nep-lab and nep-ure
Note: LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (95)

Published as Matthew J. Notowidigdo, 2020. "The Incidence of Local Labor Demand Shocks," Journal of Labor Economics, vol 38(3), pages 687-725.

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Related works:
Journal Article: The Incidence of Local Labor Demand Shocks (2020)
Working Paper: The Incidence of Local Labor Demand Shocks (2011)
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