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Local Labor Markets
Abstract
This paper studies the processes of wage and employment dynamics within local labor markets. The theoretical context is a dynamic spatial equilibrium among locales that is supported by incentives to migrate to markets offering the greatest present value of future earnings. Thus costly migration arbitrages geographic wage differences. Using a time series of cross-sectional files from the Current Population Surveys of 1977-79, I find that wages are sensitive to interarea differences in market conditions. A positive relative shock to local labor demand increases relative wages within a locale, but expectations of future demand actually reduce current wages because of increased current migration. Thus wages are more flexible in response to transitory changes in local market conditions than to permanent ones. Consistent with theory, wages are most flexible among the least mobile demographic groups, who are inelastically supplied across geographic areas.
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Citations
Cited by
The China Syndrome: Local Labor Market Effects of Import Competition in the United States
Autor, D. H., Dorn, D., & Hanson, G. H. (2013) · American Economic Review · doi:10.1257/aer.103.6.2121 · Cited by 4,459
The growth of low-skill service jobs and the polarization of the US labor market
Autor, D. H., & Dorn, D. (2013) · American Economic Review · doi:10.1257/aer.103.5.1553 · Cited by 3,824
An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Units
Moulton, B. R. (1990) · The Review of Economics and Statistics · doi:10.2307/2109724 · Cited by 2,630
Chapter 12 The theory of equalizing differences
Rosen, S. (1986) · Handbook of Labor Economics · doi:10.1016/s1573-4463(86)01015-5 · Cited by 1,301
Identifying Agglomeration Spillovers: Evidence from Winners and Losers of Large Plant Openings
Greenstone, M., Hornbeck, R., & Moretti, E. (2010) · Journal of Political Economy · doi:10.1086/653714 · Cited by 1,138
Metadata
- Authors
- Topel, R. H.
- Venue
- Journal of Political Economy
- Publisher
- University of Chicago Press
- Published
- 1986-06
- Volume
- 94
- Issue
- 3, Part 2
- Pages
- S111-S143
- ISSN
- 0022-3808 (ISSN-L)
- 1537-534X
- OpenAlex
- W2026583129
- Cited by
- 509
- References
- 0
- FWCI
- 24.23
- Type
- journal article
- Language
- en
- Open access
- closed
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