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Employment, Unemployment and Demand Shifts in Local Labor Markets

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  • Holzer, Harry J

Abstract

This paper analyzes the effects of demand shifts within and between local labor markets on unemployment and employment outcomes observed in those markets. The demand shifts are calculated from sales growth data at the firm and industry levels. The results show that, in general, employment and wage adjustments by firms are primarily driven by shifts in labor demand. Demand shifts between local areas account for large fractions of the observed variation in unemployment and employment rate levels and changes across areas. Within-area shifts cause much smaller and insignificant amounts of unemployment, and only if they are between-industry. Copyright 1991 by MIT Press.

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Bibliographic Info

Article provided by MIT Press in its journal Review of Economics & Statistics.

Volume (Year): 73 (1991)
Issue (Month): 1 (February)
Pages: 25-32

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Handle: RePEc:tpr:restat:v:73:y:1991:i:1:p:25-32

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  1. Joseph Altonji & John C. Ham, 1985. "Variation in Employment Growth in Canada: The Role of External, National, Regional and Industrial Factors," Working Papers 581, Princeton University, Department of Economics, Industrial Relations Section..
  2. Nickell, S.J., 1987. "Dynamic models of labour demand," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 9, pages 473-522 Elsevier.
  3. Jonathan S. Leonard, 1986. "In the Wrong Place at the Wrong Time: The Extent of Frictional and Structural Unemployment," NBER Working Papers 1979, National Bureau of Economic Research, Inc.
  4. Robert J. Gordon, 1981. "Inflation, Flexible Exchange Rates, and the Natural Rate of Unemployment," NBER Working Papers 0708, National Bureau of Economic Research, Inc.
  5. Dunne, Timothy & Roberts, Mark J & Samuelson, Larry, 1989. "Plant Turnover and Gross Employment Flows in the U.S. Manufacturing Sector," Journal of Labor Economics, University of Chicago Press, vol. 7(1), pages 48-71, January.
  6. Holzer, Harry J & Katz, Lawrence F & Krueger, Alan B, 1991. "Job Queues and Wages," The Quarterly Journal of Economics, MIT Press, vol. 106(3), pages 739-68, August.
  7. Murphy, Kevin J & Hofler, Richard A, 1984. "Determinants of Geographic Unemployment Rates: A Selectively Pooled-Simultaneous Model," The Review of Economics and Statistics, MIT Press, vol. 66(2), pages 216-23, May.
  8. Evans, David S, 1987. "Tests of Alternative Theories of Firm Growth," Journal of Political Economy, University of Chicago Press, vol. 95(4), pages 657-74, August.
  9. Topel, Robert H, 1986. "Local Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages S111-43, June.
  10. Marston, Stephen T, 1985. "Two Views of the Geographic Distribution of Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 100(1), pages 57-79, February.
  11. Davis, Steven J, 1987. "Allocative Disturbances and Specific Capital in Real Business Cycle Theories," American Economic Review, American Economic Association, vol. 77(2), pages 326-32, May.
  12. Robert E. Hall, 1970. "Why Is the Unemployment Rate So High at Full Employment?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 1(3), pages 369-410.
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