Using panel data on U.S. MSAs, this paper estimates how a typical MSA's wages of different demographic groups, and prices, are affected by overall MSA unemployment, the distribution of unemployment among different groups, and national prices and wages. MSA unemployment has strong effects on MSA wages and prices, but the distribution of unemployment among different groups has weak effects on wages and prices. Using these estimates, simulations show that targeting high-unemployment groups for unemployment reductions will not reduce wage or price inflation pressures. The estimates also show that the effects of MSA unemployment on prices and disadvantaged groups' wages are greater (in absolute value) at lower unemployment rates. As a result, simulations using these estimates suggest that national unemployment can be reduced with less inflationary pressures by targeting unemployment reductions at MSAs with high unemployment.
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Paper provided by W.E. Upjohn Institute for Employment Research in its series Staff Working Papers with number
00-63.
Length: Date of creation: Sep 2000 Date of revision: Handle: RePEc:upj:weupjo:00-63
Note: Portions of this paper are incorporated into Appendix 9 of Timothy J. Bartik. 2001. Jobs for the Poor: Can labor Demand Policies Help? New York: Russell Sage Foundation. Contact details of provider: Postal: 300 S. Westnedge Ave. Kalamazoo, MI 49007 USA Phone: 1-616-343-5541 Fax: 1-616-343-7310 Web page: http://www.upjohninstitute.org
Find related papers by JEL classification: J0 - Labor and Demographic Economics - - General J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs I3 - Health, Education, and Welfare - - Welfare and Poverty
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