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Labor Market Adjustment In The Us

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  • SAAD-LESSLER, Joelle

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    Abstract

    This paper analyzes how changes in the local skill distribution of the labor force affect the local wage distribution. I measure the elasticity of wages to changes in the supply of the various skill groups, using time series and cross sectional data on Metropolitan Statistical Areas in the US in 1980 and 1990. Unlike previous studies, I estimate own and cross-wage elasticity for each skill group and I allow for the existence of human capital spillovers in the labor market. Moreover, I introduce a new instrument to control for the bias that occurs when local labor supplies are simultaneously determined with local wages. I find that cross-wage elasticities are significantly different from zero and therefore should not be ignored. I also find that the estimated cross-wage elasticities are not symmetrical across skill groups, and therefore should not be constrained to be symmetrical.

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    Bibliographic Info

    Article provided by Euro-American Association of Economic Development in its journal Regional and Sectoral Economic Studies.

    Volume (Year): 8 (2008)
    Issue (Month): 2 ()
    Pages: 29-50

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    Handle: RePEc:eaa:eerese:v:8:y2008:i:8_10

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    Related research

    Keywords: Labor skill; Statistical areas; US; Wage elasticity;

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    1. Joseph Altonji & David Card, 1989. "The Effects of Immigration on the Labor Market Outcome of Less-Skilled Natives," Working Papers 636, Princeton University, Department of Economics, Industrial Relations Section..
    2. Card, David, 2001. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 22-64, January.
    3. Gianmarco I.P. Ottaviano & Giovanni Peri, 2006. "Rethinking the Effects of Immigration on Wages," NBER Working Papers 12497, National Bureau of Economic Research, Inc.
    4. Juhn, Chinhui & Kim, Dae Il, 1999. "The Effects of Rising Female Labor Supply on Male Wages," Journal of Labor Economics, University of Chicago Press, vol. 17(1), pages 23-48, January.
    5. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
    6. David Card & Thomas Lemieux, 2001. "Can Falling Supply Explain The Rising Return To College For Younger Men? A Cohort-Based Analysis," The Quarterly Journal of Economics, MIT Press, vol. 116(2), pages 705-746, May.
    7. Bound, John & Holzer, Harry J, 1993. "Industrial Shifts, Skills Levels, and the Labor Market for White and Black Males," The Review of Economics and Statistics, MIT Press, vol. 75(3), pages 387-96, August.
    8. Bartel, Ann P, 1989. "Where Do the New U.S. Immigrants Live?," Journal of Labor Economics, University of Chicago Press, vol. 7(4), pages 371-91, October.
    9. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1.
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