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Opportunities and competition in thick labor markets: Evidence from plant closures

Author

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  • Peter Haller
  • Daniel F. Heuermann

Abstract

Since Marshall (1890), it has been widely held in urban economic theory that cities insure workers against the risk of unemployment by offering a larger pool of potential jobs. Using a large administrative panel data set on workers displaced as a result of plant closures, we examine whether positive effects from a higher urban job density are offset by more intense competition between workers. When controlling for the sorting of workers between regions, we find robust evidence that the effect of job competition on unemployment duration exceeds that of job opportunities in absolute value. Our results put the idea of urban risk‐sharing into perspective and provide an explanation for observed longer unemployment durations in cities.

Suggested Citation

  • Peter Haller & Daniel F. Heuermann, 2020. "Opportunities and competition in thick labor markets: Evidence from plant closures," Journal of Regional Science, Wiley Blackwell, vol. 60(2), pages 273-295, March.
    • Handle: RePEc:bla:jregsc:v:60:y:2020:i:2:p:273-295
    DOI: 10.1111/jors.12460
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    Cited by:

    1. Kerstin Ostermann & Johann Eppelsheimer & Nina Gläser & Peter Haller & Martina Oertel, 2022. "Geodata in labor market research: trends, potentials and perspectives," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 56(1), pages 1-17, December.
    2. Lukas Kuld & Sara Mitchell & Christiane Hellmanzik, 2021. "Manhattan Transfer: Productivity effects of agglomeration in American authorship," Trinity Economics Papers tep0821, Trinity College Dublin, Department of Economics.
    3. Arntz, Melanie & Ivanov, Boris & Pohlan, Laura, 2022. "Regional Structural Change and the Effects of Job Loss," IZA Discussion Papers 15313, IZA Network @ LISER.
    4. Huang, Ruting & Duan, Shanshan & Li, Xiyan, 2025. "Environmental regulation and intra-firm wage inequality: A skill premium perspective," Energy Economics, Elsevier, vol. 148(C).
    5. Illing, Hannah & Koch, Theresa, 2021. "Who Suffers the Greatest Loss? Costs of Job Displacement for Migrants and Natives," IAB-Discussion Paper 202108, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    6. Kuld, Lukas & Mitchell, Sara & Hellmanzik, Christiane, 2025. "Manhattan Transfer: Heterogeneous productivity effects of agglomeration in American authorship," Regional Science and Urban Economics, Elsevier, vol. 111(C).

    More about this item

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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