Demand Shifts, Population Adjustments, and Labor Market Outcomes During the 1980s

Abstract

In this paper we explore the effects of labor demand shifts and population adjustments across metropolitan areas on the employment and earnings of various demographic groups during the 1980s. Results show that, although earnings and employment deteriorated for less-education and black males in most areas in the 1980s, there was a good deal of geographic variation in the magnitudes of these changes. Shifts in labor demand across local areas contributed to this variation, and had greater relative impacts on the earnings and employment of these demographic groups. We also find that popu- lation shifts across areas, presumably due to migation, at least partially offset the effects of these demand shifts. But less-education workers showed substantially lower population adjustments in response to these demand shifts. These limited supply responses apparently contributed importantly to relatively greater deterioration of employment and earnings of these groups in declining areas during the 1980s.