Local Labor Markets Should Be Redefined: New Definitions Based on Estimated Demand-Shock Spillovers

Timothy Bartik ()

No 24-407, Upjohn Working Papers from W.E. Upjohn Institute for Employment Research

Abstract: This paper provides estimates that lead to better U.S. labor market definitions. Current U.S. labor market definitions—for example, metropolitan areas and commuting zones—are unsatisfactory because they are ad hoc and usually do not correspond to commonly used local planning areas. This paper proposes basing U.S. labor market definitions on how a job shock to a county affects nearby counties’ employment rates. New estimates of county spillovers are presented. Using these estimated spillovers, new multicounty labor market definitions are based on maximizing a weighted sum of total spillovers captured, versus taking the average size of within-market effects. These new “spillover-defined local labor markets” (SLMs) correspond more closely to commonly used local planning areas, and they better capture spillovers and commuting flows without becoming excessively large.

Keywords: Local labor markets; commuting zones; metropolitan areas (search for similar items in EconPapers)
JEL-codes: R10 R12 R23 (search for similar items in EconPapers)
Date: 2024-10
New Economics Papers: this item is included in nep-com, nep-geo, nep-lab and nep-ure
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