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Convergence and Stability in US Regional Employment

Andrew Glyn, Robert Rowthorn, Faculty of Economics and Politics and Cambridge University

No 92, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: It is widely believed that regional labour markets in the USA are highly flexible, so that employment shocks have only transitory effects on joblessness since induced migration quickly offsets much of the initial impact. However time-series analysis of the response to shocks is very sensitive to errors of measurement in labour market data, and such errors are large in some widely used series which depend on household surveys of limited size. Adjusting for the likelihood magnitude of such errors with some novel statistical approaches, and using a range of data sources, we show that the responsiveness of employment rates to shocks has been rather weak in the USA over the past 30 years, though probably stronger in the 1950s and 1960s. This suggests that flexible regional adjustment is not a major factor behind the contemporary success of monetary union in the USA.

Keywords: regional employment; convergence; measurement errors; regional adjustment (search for similar items in EconPapers)
JEL-codes: C1 J6 N9 R1 (search for similar items in EconPapers)
Date: 2002-03-01
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