How Do the Effects of Local Growth on Employment Rates Vary with Initial Labor Market Conditions?

Upjohn Institute Working Paper No. 09-148

36 Pages Posted: 4 Apr 2009 Last revised: 17 Jun 2015

See all articles by Timothy Bartik

Timothy Bartik

W.E. Upjohn Institute for Employment Research

Date Written: November 4, 2006

Abstract

This paper examines how the effects of increased employment growth on a metropolitan area's employment to population ratio varies with the initial tightness of the metropolitan area's labor market. This examination is relevant to evaluating the benefits of local economic development policies in different metropolitan areas. Much of the benefits of such policies are in higher employment rates. The empirical estimates suggest that the effectiveness of employment growth in increasing the employment to population ratio is lower in metropolitan areas with "tight" labor markets. In addition, some estimates suggest that growth has the greatest long-run effects on the employment to population ratio in metropolitan areas with some looseness in labor market conditions, compared to metropolitan areas with the most tight or most loose labor market conditions. Growth pays off the most for metropolitan areas that have above-average labor market problems, but not too much above average.

Keywords: metropolitan areas, employment growth, employment to population ratio, regional economic development

JEL Classification: R23, J61

Suggested Citation

Bartik, Timothy, How Do the Effects of Local Growth on Employment Rates Vary with Initial Labor Market Conditions? (November 4, 2006). Upjohn Institute Working Paper No. 09-148, Available at SSRN: https://ssrn.com/abstract=1372814 or http://dx.doi.org/10.2139/ssrn.1372814

Timothy Bartik (Contact Author)

W.E. Upjohn Institute for Employment Research ( email )

300 South Westnedge Avenue
Kalamazoo, MI 49007-4686
United States

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