How Local Are Labor Markets? Evidence from a Spatial Job Search Model†

How Local Are Labor Markets? Evidence from a Spatial Job Search Model† AbstractThis 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. (JEL J61, J64, R23, R58) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Review American Economic Association

How Local Are Labor Markets? Evidence from a Spatial Job Search Model†

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Publisher
American Economic Association
Copyright
Copyright © 2017 © American Economic Association
ISSN
0002-8282
D.O.I.
10.1257/aer.20131026
Publisher site
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Abstract

AbstractThis 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. (JEL J61, J64, R23, R58)

Journal

American Economic ReviewAmerican Economic Association

Published: Oct 1, 2017

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