This paper tests whether the correlation between wages and the spatial concentration of employment can be explained by unobserved worker productivity differences. Residential location is used as a proxy for a worker's unobserved productivity, and average workplace commute time is used to test whether location based productivity differences are compensated away by longer commutes. Analyses using confidential data from the 2000 Decennial Census Long Form find that the agglomeration estimates are robust to comparisons within residential location and that the estimates do not persist after controlling for commutes suggesting that the productivity differences across locations are due to agglomeration, rather than productivity differences across individuals.
-
Identifying Individual and Group Effects in the Presence of Sorting: A Neighborhood Effects Application
January 2007
Working Paper Number:
CES-07-03
Researchers have long recognized that the non-random sorting of individuals into groups generates correlation between individual and group attributes that is likely to bias naive estimates of both individual and group effects. This paper proposes a non-parametric strategy for identifying these effects in a model that allows for both individual and group unobservables, applying this strategy to the estimation of neighborhood effects on labor market outcomes. The first part of this strategy is guided by a robust feature of the equilibrium in the canonical vertical sorting model of Epple and Platt (1998), that there is a monotonic relationship between neighborhood housing prices and neighborhood quality. This implies that under certain conditions a non-parametric function of neighborhood housing prices serves as a suitable control function for the neighborhood unobservable in the labor market outcome regression. This control function converts the problem to a model with one unobservable so that traditional instrumental variables solutions may be applied. In our application, we instrument for each individual.s observed neighborhood attributes with the average neighborhood attributes of a set of observationally identical individuals. The neighborhood effects model is estimated using confidential microdata from the 1990 Decennial Census for the Boston MSA. The results imply that the direct effects of geographic proximity to jobs, neighborhood poverty rates, and average neighborhood education are substantially larger than the conditional correlations identified using OLS, although the net effect of neighborhood quality on labor market outcomes remains small. These findings are robust across a wide variety of specifications and robustness checks.
View Full
Paper PDF
-
RACE-SPECIFIC AGGLOMERATION ECONOMIES: SOCIAL DISTANCE AND THE BLACK-WHITE WAGE GAP
April 2013
Working Paper Number:
CES-13-24
We demonstrate a striking but previously unnoticed relationship between city size and the black-white wage gap, with the gap increasing by 2.5% for every million-person increase in urban population. We then look within cities and document that wages of blacks rise less with agglomeration in the workplace location, measured as employment density per square kilometer, than do white wages. This pattern holds even though our method allows for non-parametric controls for the effects of age, education, and other demographics on wages, for unobserved worker skill as proxied by residential location, and for the return to agglomeration to vary across those demographics, industry, occupation and metropolitan areas. We find that an individual's wage return to employment density rises with the share of workers in their work location who are of their own race. We observe similar patterns for human capital externalities as measured by share workers with a college education. We also find parallel results for firm productivity by employment density and share college-educated using firm racial composition in a sample of manufacturing firms. These findings are consistent with the possibility that blacks, and black- majority firms, receive lower returns to agglomeration because such returns operate within race, and blacks have fewer same-race peers and fewer highly-educated same-race peers at work from whom to enjoy spillovers than do whites. Data on self-reported social networks in the General Social Survey provide further evidence consistent with this mechanism, showing that blacks feel less close to whites than do whites, even when they work exclusively with whites. We conclude that social distance between blacks and whites preventing shared benefits from agglomeration isa significant contributor to overall black-white wage disparities.
View Full
Paper PDF
-
Place of Work and Place of Residence: Informal Hiring Networks and Labor Market Outcomes
October 2005
Working Paper Number:
CES-05-23
We use a novel dataset and research design to empirically detect the effect of social interactions among neighbors on labor market outcomes. Specifically, using Census data that characterize residential and employment locations down to the city block, we examine whether individuals residing in the same block are more likely to work together than those in nearby blocks. We find evidence of significant social interactions operating at the block level: residing on the same versus nearby blocks increases the probability of working together by over 33 percent. The results also indicate that this referral effect is stronger when individuals are similar in sociodemographic characteristics (e.g., both have children of similar ages) and when at least one individual is well attached to the labor market. These findings are robust across various specifications intended to address concerns related to sorting and reverse causation. Further, having determined the characteristics of a pair of individuals that lead to an especially strong referral effect, we provide evidence that the increased availability of neighborhood referrals has a significant impact on a wide range of labor market outcomes including employment and wages.
View Full
Paper PDF
-
A Warm Embrace or the Cold Shoulder: Wage and Employment Outcomes in Ethnic Enclaves
April 2008
Working Paper Number:
CES-08-09
This paper examines how immigrant enclaves influence labor market outcomes. We examine the effect of ethnic concentration on both immigrant earnings and employment in high immigration states using the non-public use, 1-in-6 sample of the 2000 U.S. Census. Although we find that there is some variability in the estimated enclave effects, they exhibit an overall negative impact. Male and female immigrants from several ethnic groups tend to earn lower wages when residing in areas with larger ethnic concentrations. Similarly, for employment, most of the statistically significant effects are negative, although much smaller than the enclave impacts on earnings.
View Full
Paper PDF
-
Spatial Mismatch or Racial Mismatch?
June 2007
Working Paper Number:
CES-07-16
We contrast the spatial mismatch hypothesis with what we term the racial mismatch hypothesis - that the problem is not a lack of jobs, per se, where blacks live, but a lack of jobs into which blacks are hired, whether because of discrimination or labor market networks in which race matters. We first report new evidence on the spatial mismatch hypothesis, using data from Census Long-Form respondents. We construct direct measures of the presence of jobs in detailed geographic areas, and find that these job density measures are related to employment of black male residents in ways that would be predicted by the spatial mismatch hypothesis - in particular that spatial mismatch is primarily an issue for low-skilled black male workers. We then look at racial mismatch, by estimating the effects of job density measures that are disaggregated by race. We find that it is primarily black job density that influences black male employment, whereas white job density has little if any influence on their employment. This evidence implies that space alone plays a relatively minor role in low black male employment rates.
View Full
Paper PDF
-
Do Labor Market Networks Have An Important Spatial Dimension?
September 2012
Working Paper Number:
CES-12-30
We test for evidence of spatial, residence-based labor market networks. Turnover is lower for workers more connected to their neighbors generally and more connected to neighbors of the same race or ethnic group. Both results are consistent with networks producing better job matches, while the latter could also reflect preferences for working with neighbors of the same race or ethnicity. For earnings, we find a robust positive effect of the overall residence-based network measure, whereas we usually find a negative effect of the same-group measure, suggesting that the overall network measure reflects productivity enhancing positive network effects, while the same-group measure captures a non-wage amenity.
View Full
Paper PDF
-
Spatial Influences on the Employment of U.S. Hispanics: Spatial Mismatch, Discrimination, or Immigrant Networks?
January 2009
Working Paper Number:
CES-09-03
Employment rates of Hispanic males in the United States are considerably lower than employment rates of whites. In the data used in this paper, the Hispanic male employment rate is 61 percent, compared with 83 percent for white men.1 The question of the employment disadvantage of Hispanic men likely has many parallels to the question of the employment disadvantage of black men, where factors including spatial mismatch, discrimination, and labor market networks have all received attention as contributing factors. However, the Hispanic disadvantage has been much less studied, and the goal of this paper is to bridge that gap. To that end, we present evidence that tries to assess which of the three factors listed above appears to contribute to the lower employment rate of Hispanic males. We focus in particular on immigrant Hispanics and Hispanics who do not speak English well.
View Full
Paper PDF
-
Has Falling Crime Invited Gentrification?
January 2017
Working Paper Number:
CES-17-27
Over the past two decades, crime has fallen dramatically in cities in the United States. We explore whether, in the face of falling central city crime rates, households with more resources and options were more likely to move into central cities overall and more particularly into low income and/or majority minority central city neighborhoods. We use confidential, geocoded versions of the 1990 and 2000 Decennial Census and the 2010, 2011, and 2012 American Community Survey to track moves to different neighborhoods in 244 Core Based Statistical Areas (CBSAs) and their largest central cities. Our dataset includes over four million household moves across the three time periods. We focus on three household types typically considered gentrifiers: high-income, college-educated, and white households. We find that declines in city crime are associated with increases in the probability that highincome and college-educated households choose to move into central city neighborhoods, including low-income and majority minority central city neighborhoods. Moreover, we find little evidence that households with lower incomes and without college degrees are more likely to move to cities when violent crime falls. These results hold during the 1990s as well as the 2000s and for the 100 largest metropolitan areas, where crime declines were greatest. There is weaker evidence that white households are disproportionately drawn to cities as crime falls in the 100 largest metropolitan areas from 2000 to 2010.
View Full
Paper PDF
-
Labor Market Networks and Recovery from Mass Layoffs Before, During, and After the Great Recession
June 2015
Working Paper Number:
CES-15-14
We test the effects of labor market networks defined by residential neighborhoods on re-employment following mass layoffs. We develop two measures of labor market network strength. One captures the flows of information to job seekers about the availability of job vacancies at employers of workers in the network, and the other captures referrals provided to employers by other network members. These network measures are linked to more rapid re-employment following mass layoffs, and to re-employment at neighbors' employers. We also find evidence that network connections ' especially those that provide information about job vacancies ' became less productive during the Great Recession.
View Full
Paper PDF
-
HUMAN CAPITAL TRAPS? ENCLAVE EFFECTS USING LINKED EMPLOYER-HOUSEHOLD DATA
June 2013
Working Paper Number:
CES-13-29
This study uses linked employer-household data to measure the impact of immigrant social networks, as identified via neighborhood and workplace affiliation, on immigrant earnings. Though ethnic enclaves can provide economic opportunities through job creation and job matching, they can also stifle the assimilation process by limiting interactions between enclave members and non-members. I find that higher residential and workplace ethnic clustering among immigrants is consistently correlated with lower earnings. For immigrants with a high school education or less, these correlations are primarily due to negative self-selection. On the other hand, self-selection fails to explain the lower earnings associated with higher ethnic clustering for immigrants with post-secondary schooling. The evidence suggests that co-ethnic clustering has no discernible effect on the earnings of immigrants with lower education, but may be leading to human capital traps for immigrants who have more than a high school education.
View Full
Paper PDF