Housing busts and household mobility: an update
Interest in the relationship between household mobility and financial frictions, especially frictions associated with negative home equity, has grown following the recent boom and bust in U.S. housing markets. With prices falling 30 percent nationally, negative equity greatly expanded across many markets. More recently, the decline in mortgage rates along with various policy interventions to encourage refinancing at historically low rates suggests the need to also revisit mortgage interest rate lock-in effects, which are likely to become important once Federal Reserve interest rate policy ...
The role of the housing market in the migration response to employment shocks
The United States is known for the ability of its residents to move to where the jobs are, and this has helped the nation maintain its position as the world?s top economy. Households? decisions to move depend not only on job prospects but also on the relative cost of housing. I investigate how the housing market affects the flow of workers across cities. This occurs through at least two channels: the relative mobility of homeowners versus renters, and the relative cost of housing across markets. I use homeownership rates to measure the former, and use an index that measures house prices ...
Gross job flows between plants and industries
A remarkable feature of the current U.S. economic expansion has been its ability to shrug off the adverse effects of financial crises and economic slowdowns around the world for nearly two years. Recently, however, foreign-sector developments have triggered a sizable shift in the sectoral composition of U.S. employment. By early 1999, employment growth in the goods-producing sector was still humming along. Historically, substantial shifts in labor demand between sectors have been correlated with the business cycle. But recent developments are unusual and highlight our incomplete ...
New data on worker flows during business cycles
The most obvious economic cost of recessions is that workers become involuntarily unemployed. During the average business cycle contraction, total employment declines by about 1.5 percent, the unemployment rate rises by 2.7 percentage points, and it takes almost two years before employment recovers its pre-recession level. Both fiscal policy and monetary policy are concerned with these business cycle deviations of employment from its "full-employment" or "equilibrium" level. The aggregate statistics on employment and unemployment mask economically important information about the ...
Labor market pooling and occupational agglomeration
This paper examines the micro-foundations of occupational agglomeration in U.S. metropolitan areas, with an emphasis on labor market pooling. Controlling for a wide range of occupational attributes, including proxies for the use of specialized machinery and for the importance of knowledge spillovers, we find that jobs characterized by a unique knowledge base exhibit higher levels of geographic concentration than do occupations with generic knowledge requirements. Further, by analyzing co-agglomeration patterns, we find that occupations with similar knowledge requirements tend to ...
Job-finding and separation rates in the OECD
In this paper, we provide a set of comparable estimates of aggregate monthly job-finding and separation rates for twenty-seven OECD (Organisation for Economic Co-operation and Development) countries; these estimates can be used for the cross-country calibration of search models of unemployment. We find that cross-country differences in job-finding rates are much greater than those in separation rates. Our results are quantitatively and qualitatively in line with those published in previous studies; however, they cover a much larger set of countries. We combine our estimates with evidence on ...
Propensity score matching, a distance-based measure of migration, and the wage growth of young men
This paper estimates the effect of U.S. internal migration on real wage growth between the movers' first and second jobs. Our analysis of migration differs from previous research in three important aspects. First, we exploit the confidential geocoding in the National Longitudinal Surveys of Youth 1979 (NLSY79) to obtain a distance-based measure. Second, we let the effect of migration on wage growth differ by schooling level. Third, we use propensity score matching to measure the effect of migration on the wages of those who move. ; We develop an economic model and use it to (i) assess the ...
Spatial Wage Gaps in Frictional Labor Markets
We develop a job ladder model with labor reallocation across firms and regions, and estimate it on matched employer-employee data to study the large and persistent real wage gap between East and West Germany. We find that the wage gap is mostly due to firms paying higher wages per efficiency unit in West Germany and quantify a rich set of frictions preventing worker reallocation across space and across firms. We find that three spatial barriers impede East Germans’ ability to migrate West: migration costs, a preference to live in the East, and fewer job opportunities received from the West. ...
Cities and the growth of wages among young workers: evidence from the NLSY
Human capital-based theories of cities suggest that large, economically diverse urban agglomerations increase worker productivity by increasing the rate at which individuals acquire skills. One largely unexplored implication of this theory is that workers in big cities should see faster growth in their earnings over time than comparable workers in smaller markets. This paper examines this implication using data on a sample of young male workers drawn from the National Longitudinal Survey of Youth 1979 Cohort. The results suggest that earnings growth does tend to be faster in large, ...
Dislocated worker ten-year follow up
On a snowy February day in 1996, company officials at Advance Transformer (Advance) in Platteville, Wisconsin, gathered their workforce together for an unexpected announcement. One of Platteville?s largest employers would be closing its doors permanently.