Contrasting the Local and National Demographic Incidence of Local Labor Demand Shocks
July 2024
Working Paper Number:
CES-24-36
Abstract
This paper examines how spatial frictions that differ among heterogeneous workers and establishments shape the geographic and demographic incidence of alternative local labor demand shocks, with implications for the appropriate level of government at which to fund local economic initiatives. LEHD data featuring millions of job transitions facilitate estimation of a rich two-sided labor market assignment model. The model generates simulated forecasts of many alternative local demand shocks featuring different establishment compositions and local areas. Workers within 10 miles receive only 11.2% (6.6%) of nationwide welfare (employment) short-run gains, with at least 35.9% (62.0%) accruing to out-of-state workers, despite much larger per-worker impacts for the closest workers. Local incidence by demographic category is very sensitive to shock composition, but different shocks produce similar demographic incidence farther from the shock. Furthermore, the remaining heterogeneity in incidence at the state or national level can reverse patterns of heterogeneous demographic impacts at the local level. Overall, the results suggest that reduced-form approaches using distant locations as controls can produce accurate estimates of local shock impacts on local workers, but that the distribution of local impacts badly approximates shocks' statewide or national incidence.
Document Tags and Keywords
Keywords
Keywords are automatically generated using KeyBERT, a powerful and innovative
keyword extraction tool that utilizes BERT embeddings to ensure high-quality and contextually relevant
keywords.
By analyzing the content of working papers, KeyBERT identifies terms and phrases that capture the essence of the
text, highlighting the most significant topics and trends. This approach not only enhances searchability but
provides connections that go beyond potentially domain-specific author-defined keywords.
:
employ,
labor,
recession,
state,
shift,
spillover,
workforce,
worker,
geographically,
urban,
town,
city,
relocation,
neighborhood,
suburb,
resident,
unemployed,
disparity,
relocate,
shock
Tags
Tags are automatically generated using a pretrained language model from spaCy, which excels at
several tasks, including entity tagging.
The model is able to label words and phrases by part-of-speech,
including "organizations." By filtering for frequent words and phrases labeled as "organizations", papers are
identified to contain references to specific institutions, datasets, and other organizations.
:
Bureau of Labor Statistics,
National Science Foundation,
Total Factor Productivity,
Princeton University,
American Community Survey,
National Institute on Aging,
Alfred P Sloan Foundation,
Longitudinal Employer Household Dynamics,
Census Bureau Disclosure Review Board,
International Trade Research Report,
Federal Statistical Research Data Center
Similar Working Papers
Similarity between working papers are determined by an unsupervised neural
network model
know as Doc2Vec.
Doc2Vec is a model that represents entire documents as fixed-length vectors, allowing for the
capture of semantic meaning in a way that relates to the context of words within the document. The model learns to
associate a unique vector with each document while simultaneously learning word vectors, enabling tasks such as
document classification, clustering, and similarity detection by preserving the order and structure of words. The
document vectors are compared using cosine similarity/distance to determine the most similar working papers.
Papers identified with 🔥 are in the top 20% of similarity.
The 10 most similar working papers to the working paper 'Contrasting the Local and National Demographic Incidence of Local Labor Demand Shocks' are listed below in order of similarity.
-
Working PaperFirm Dynamics and Assortative Matching
May 2014
Working Paper Number:
CES-14-25
I study the relationship between firm growth and the characteristics of newly hired workers. Using Census microdata I obtain a novel empirical result: when a given firm grows faster it hires workers with higher past wages. These results suggest that productive, fast-growing firms tend to hire more productive workers, a form of positive assortative matching. This contrasts with prior research that has found negligible or negative sorting between workers and firms. I present evidence that this difference arises because previous studies have focused on cross-sectional comparisons across firms and industries, while my results condition on firm characteristics (e.g. size, industry, or firm fixed effects). Motivated by the empirical findings I develop a search model with heterogeneous workers and firms. The model is the first to study worker-firm sorting in an environment with worker heterogeneity, firm productivity shocks, multi-worker firms, and search frictions. Despite this richness the model is tractable, allowing me to characterize assortative matching, compositional dynamics and other properties analytically. I show that the model reproduces the positive firm growth-quality of hires correlation when worker and firm types are strong complements in production (i.e. the production function is strictly log-supermodular).View Full Paper PDF
-
Working PaperU.S. Worker Mobility Across Establishments within Firms: Scope, Prevalence, and Effects on Worker Earnings
May 2024
Working Paper Number:
CES-24-24
Multi-establishment firms account for around 60% of U.S. workers' primary employers, providing ample opportunity for workers to change their work location without changing their employer. Using U.S. matched employer-employee data, this paper analyzes workers' access to and use of such between-establishment job transitions, and estimates the effect on workers' earnings growth of greater access, as measured by proximity of employment at other within-firm establishments. While establishment transitions are not perfectly observed, we estimate that within-firm establishment transitions account for 7.8% percent of all job transitions and 18.2% of transitions originating from the largest firms. Using variation in worker's establishment locations within their firms' establishment network, we show that having a greater share of the firm's jobs in nearby establishments generates meaningful increases in workers' earnings: a worker at the 90th percentile of earnings gains from more proximate within-firm job opportunities can expect to enjoy 2% higher average earnings over the following five years than a worker at the 10th percentile with the same baseline earnings.View Full Paper PDF
-
Working PaperAssessing the Incidence and Efficiency of a Prominent Place Based Policy
February 2011
Working Paper Number:
CES-11-07
This paper empirically assesses the incidence and efficiency of Round I of the federal urban Empowerment Zone (EZ) program using confidential microdata from the Decennial Census and the Longitudinal Business Database. Using rejected and future applicants to the EZ program as controls, we find that EZ designation substantially increased employment in zone neighborhoods and generated wage increases for local workers without corresponding increases in population or the local cost of living. The results suggest the efficiency costs of first Round EZs were relatively small.View Full Paper PDF
-
Working PaperModeling Labor Markets with Heterogeneous Agents and Matches
May 2002
Working Paper Number:
tp-2002-19
I present a matching model with heterogeneous workers, firms, and worker-fim matches. The model generalizes the seminal Jovanovic (1979) model to the case of heterogeneous agents. The equilibrium wage is linear in a person-specific component, a firm-specific component, and a match specific component that varies with tenure. Under certain conditions, the equilibrium wage takes a simpler structure where the match specific component does not vary with tenure. I discuss fixed- and mixedeffect methods for estimating wage models with this structure on longitudinal linked employer-employee data. The fixed effect specification relies on restrictive identification conditions, but is feasible for very large databases. The mixed model requires less restrictive identification conditions, but is feasible only on relatively small databases. Both the fixed and mixed models generate empirical person, firm, and match effects with characteristics that are consistent with predictions from the matching model; the mixed model moreso than the fixed model. Shortcomings of the fixed model appear to be artifacts of the identification conditions.View Full Paper PDF
-
Working PaperRevisiting the Effects of Unemployment Insurance Extensions on Unemployment: A Measurement Error-Corrected Regression Discontinuity Approach
March 2016
Working Paper Number:
carra-2016-01
The extension of Unemployment Insurance (UI) benefits was a key policy response to the Great Recession. However, these benefit extensions may have had detrimental labor market effects. While evidence on the individual labor supply response indicates small effects on unemployment, recent work by Hagedorn et al. (2015) uses a county border pair identification strategy to find that the total effects inclusive of effects on labor demand are substantially larger. By focusing on variation within border county pairs, this identification strategy requires counties in the pairs to be similar in terms of unobservable factors. We explore this assumption using an alternative regression discontinuity approach that controls for changes in unobservables by distance to the border. To do so, we must account for measurement error induced by using county-level aggregates. These new results provide no evidence of a large change in unemployment induced by differences in UI generosity across state boundaries. Further analysis suggests that individuals respond to UI benefit differences across boundaries by targeting job search in high-benefit states, thereby raising concerns of treatment spillovers in this setting. Taken together, these two results suggest that the effect of UI benefit extensions on unemployment remains an open question.View Full Paper PDF
-
Working PaperPay, Employment, and Dynamics of Young Firms
July 2019
Working Paper Number:
CES-19-23
Why do young firms pay less? Using confidential microdata from the US Census Bureau, we find lower earnings among workers at young firms. However, we argue that such measurement is likely subject to worker and firm selection. Exploiting the two-sided panel nature of the data to control for relevant dimensions of worker and firm heterogeneity, we uncover a positive and significant young-firm pay premium. Furthermore, we show that worker selection at firm birth is related to future firm dynamics, including survival and growth. We tie our empirical findings to a simple model of pay, employment, and dynamics of young firms.View Full Paper PDF
-
Working PaperThe Distributional Effects of Minimum Wages: Evidence from Linked Survey and Administrative Data
March 2018
Working Paper Number:
carra-2018-02
States and localities are increasingly experimenting with higher minimum wages in response to rising income inequality and stagnant economic mobility, but commonly used public datasets offer limited opportunities to evaluate the extent to which such changes affect earnings growth. We use administrative earnings data from the Social Security Administration linked to the Current Population Survey to overcome important limitations of public data and estimate effects of the minimum wage on growth incidence curves and income mobility profiles, providing insight into how cross-sectional effects of the minimum wage on earnings persist over time. Under both approaches, we find that raising the minimum wage increases earnings growth at the bottom of the distribution, and those effects persist and indeed grow in magnitude over several years. This finding is robust to a variety of specifications, including alternatives commonly used in the literature on employment effects of the minimum wage. Instrumental variables and subsample analyses indicate that geographic mobility likely contributes to the effects we identify. Extrapolating from our estimates suggests that a minimum wage increase comparable in magnitude to the increase experienced in Seattle between 2013 and 2016 would have blunted some, but not nearly all, of the worst income losses suffered at the bottom of the income distribution during the Great Recession.View Full Paper PDF
-
Working PaperDisplaced workers, early leavers, and re-employment wages
November 2002
Working Paper Number:
tp-2002-18
In this paper, we lay out a search model that takes explicitly into account the information flow prior to a mass layoff. Using universal wage data files that allow us to identify individuals working with healthy and displacing firms both at the time of displacement as well as any other time period, we test the predictions of the model on re-employment wage differentials. Workers leaving a "distressed" firm have higher re-employment wages than workers who stay with the distressed firm until displacement. This result is robust to the inclusion of controls for worker quality and unobservable firm characteristics.View Full Paper PDF
-
Working PaperDid Timing Matter? Life Cycle Differences in Effects of Exposure to the Great Recession
September 2019
Working Paper Number:
CES-19-25
Exposure to a recession can have persistent, negative consequences, but does the severity of those consequences depend on when in the life cycle a person is exposed? I estimate the effects of exposure to the Great Recession on employment and earnings outcomes for groups defined by year of birth over the ten years following the beginning of the recession. With the exception of the oldest workers, all groups experience reductions in earnings and employment due to local unemployment rate shocks during the recession. Younger workers experience the largest earnings losses in percent terms (up to 13 percent), in part because recession exposure makes them persistently less likely to work for high-paying employers even as their overall employment recovers more quickly than older workers'. Younger workers also experience reductions in earnings and employment due to changes in local labor market structure associated with the recession. These effects are substantially smaller in magnitude but more persistent than the effects of unemployment rate increases.View Full Paper PDF
-
Working PaperThe Alpha Beta Gamma of the Labor Market
April 2022
Working Paper Number:
CES-22-10
Using a large panel dataset of US workers, we calibrate a search-theoretic model of the labor market, where workers are heterogeneous with respect to the parameters governing their employment transitions. We first approximate heterogeneity with a discrete number of latent types, and then calibrate type-specific parameters by matching type-specific moments. Heterogeneity is well approximated by 3 types: as, 's and ?s. Workers of type a find employment quickly because they have large gains from trade, and stick to their jobs because their productivity is similar across jobs. Workers of type ? find employment slowly because they have small gains from trade, and are unlikely to stick to their job because they keep searching for jobs in the right tail of the productivity distribution. During the Great Recession, the magnitude and persistence of aggregate unemployment is caused by ?s, who are vulnerable to shocks and, once displaced, they cycle through multiple unemployment spells before finding stable employment.View Full Paper PDF
