American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
How Local Are Labor Markets? Evidence from a Spatial Job Search Model
American Economic Review
vol. 107,
no. 10, October 2017
(pp. 2877–2907)
Abstract
This paper models the optimal search strategies of the unemployed across space to characterize local labor markets. Our methodology allows for linkages between numerous areas, while preserving tractability. We estimate that labor markets are quite local, as the attractiveness of jobs to applicants sharply decays with distance. Also, workers are discouraged from searching in areas with strong competition from other job-seekers. However, as labor markets overlap, a local stimulus or transport improvements have modest effects on local outcomes, because ripple effects in job applications dilute their impact across a series of overlapping markets.Citation
Manning, Alan, and Barbara Petrongolo. 2017. "How Local Are Labor Markets? Evidence from a Spatial Job Search Model." American Economic Review, 107 (10): 2877–2907. DOI: 10.1257/aer.20131026Additional Materials
JEL Classification
- J61 Geographic Labor Mobility; Immigrant Workers
- J64 Unemployment: Models, Duration, Incidence, and Job Search
- R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
- R58 Regional Development Planning and Policy