Local Labor Markets and Human Capital Investments

82 Pages Posted: 11 Mar 2017

See all articles by Russell Weinstein

Russell Weinstein

University of Illinois at Urbana-Champaign - School of Labor & Employment Relations; University of Illinois at Urbana-Champaign - Department of Economics

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: college major choice, local labor markets, migration frictions, information frictions

JEL Classification: J24, I20, R12

Suggested Citation

Weinstein, Russell, Local Labor Markets and Human Capital Investments. IZA Discussion Paper No. 10598, Available at SSRN: https://ssrn.com/abstract=2931335 or http://dx.doi.org/10.2139/ssrn.2931335

Russell Weinstein (Contact Author)

University of Illinois at Urbana-Champaign - School of Labor & Employment Relations ( email )

504 East Armory Avenue
Champaign, IL 61820-6297
United States

HOME PAGE: http://publish.illinois.edu/RussellWeinstein

University of Illinois at Urbana-Champaign - Department of Economics ( email )

410 David Kinley Hall
1407 W. Gregory
Urbana, IL 61801
United States

HOME PAGE: http://publish.illinois.edu/RussellWeinstein

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