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Employment and Earnings of Disadvantaged Young Men in a Labor Shortage Economy

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Richard B. Freeman

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Abstract

This study contrasts the economic position of youths across local labor markets that differ in their rates of unemployment using the annual merged files of the Current Population Survey and the National Longitudinal Survey of Youth. The paper finds: (1) Local labor market shortages raise the employment-population rate arid reduce the unemployment rate of disadvantaged youths by substantial amounts. (2) Shortages also raise the hourly earnings of disadvantaged youths. In the 19805 the earnings gains for youths in tight labor markets offset the deterioration in the real and relative earnings of the less skilled that marked this decade. (3) Youths in labor shortage areas had greeter increases in earnings as they aged than youths in other areas, implying that improved labor market conditions raise the longitudinal earnings profiles as well as the starting prospects of youths. These findings show that despite the social pathologies that plague disadvantaged youths, particularly less educated black youths, arid the 1980s twist in the American labor market against the less skilled, tight labor markets still operated to substantially improve their economic position.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3444.

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Date of creation: Sep 1990
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Handle: RePEc:nbr:nberwo:3444

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  1. H. J. Holzer, . "Employer Demand for Welfare Recipients and the Business Cycle: Evidence from Recent Employer Surveys," Institute for Research on Poverty Discussion Papers 1185-99, University of Wisconsin Institute for Research on Poverty. [Downloadable!]
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  2. David C Ribar, 2000. "County-Level Estimates of the Employment Prospects of Low-Skill Workers," Working Papers 00-11, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
  3. R. Haveman & B. Knight, . "The Effect of Labor Market Changes from the Early 1970s to the Late 1980s on Youth Wage, Earnings, and Household Economic Position," Institute for Research on Poverty Discussion Papers 1174-98, University of Wisconsin Institute for Research on Poverty. [Downloadable!]
  4. David G. Blanchflower & Andrew J. Oswald, 1992. "International Wage Curves," NBER Working Papers 4200, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. R. Haveman & B. Knight, . "Youth Living Arrangements, Economic Independence, and the Role of Labor Market Changes: A Cohort Analysis from the Early 1970s to the Late 1980s," Institute for Research on Poverty Discussion Papers 1201-99, University of Wisconsin Institute for Research on Poverty. [Downloadable!]
  6. J. Bound & Harry J. Holzer, . "Structural changes, employment outcomes, and population adjustments among whites and blacks: 1980-1990," Institute for Research on Poverty Discussion Papers 1057-95, University of Wisconsin Institute for Research on Poverty. [Downloadable!]
  7. H. J. Holzer & S. Danziger, . "Are Jobs Available for Disadvantaged Workers in Urban Areas?," Institute for Research on Poverty Discussion Papers 1157-98, University of Wisconsin Institute for Research on Poverty. [Downloadable!]
  8. Heather Boushey, 2002. "Reworking the Wage Curve: exploring the consistency of the model across time, space and demographic group," Review of Political Economy, Taylor and Francis Journals, vol. 14(3), pages 293-311, July. [Downloadable!] (restricted)
  9. Timothy J. Bartik, 1993. "The Effects of Local Labor Demand on Individual Labor Market Outcomes for Diffrerent Demographic Groups and the Poor," Staff Working Papers 93-23, W.E. Upjohn Institute for Employment Research. [Downloadable!] (restricted)
  10. Francine D. Blau & Lawrence M. Kahn & Jane Waldfogel, 2000. "Understanding Young Women's Marriage Decisions: The Role of Labor and Marriage Market Conditions," NBER Working Papers 7510, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. L. Quillian, . "Migration Patterns and the Growth of High-Poverty Neighborhoods, 1970–1990," Institute for Research on Poverty Discussion Papers 1172-98, University of Wisconsin Institute for Research on Poverty. [Downloadable!]
  12. Michael Wasylenko, 1997. "Taxation and economic development: the state of the economic literature," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 37-52. [Downloadable!]
  13. David G. Blanchflower & Andrew J. Oswald, 1995. "Estimating a Wage Curve for Britain 1973-1990," NBER Working Papers 4770, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  14. Dan Rickman, 1998. "The causes of regional variation in U.S. poverty: A cross-county analysis," ERSA conference papers ersa98p13, European Regional Science Association. [Downloadable!]
  15. John Bound & Harry J. Holzer, 1996. "Demand Shifts, Population Adjustments, and Labor Market Outcomes during the 1980s," NBER Working Papers 5685, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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