The Incidence of Local Labor Demand Shocks
65 Pages Posted: 25 Jun 2011 Last revised: 29 May 2023
Date Written: June 2011
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.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Gentrification and Neighborhood Housing Cycles: Will America's Future Downtowns Be Rich?
-
Endogenous Gentrification and Housing Price Dynamics
By Veronica Guerrieri, Daniel A. Hartley, ...
-
Endogenous Gentrification and Housing-Price Dynamics
By Veronica Guerrieri, Daniel A. Hartley, ...
-
Who Gentrifies Low Income Neighborhoods?
By Terra Mckinnish, Randall P. Walsh, ...
-
Who Gentrifies Low-Income Neighborhoods?
By Terra Mckinnish, Randall P. Walsh, ...
-
By Matthew E. Kahn, Ryan Vaughn, ...
-
Sexual Orientation and Neighborhood Quality: Do Same-Sex Couples Make Better Communities?
By Shihe Fu
-
Crude Substitution: The Cyclical Dynamics of Oil Prices and the Skill Premium
By Linnea Polgreen and Pedro Silos