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Thick-market effects and churning in the labor market: Evidence from US cities

Listed author(s):
  • Bleakley, Hoyt
  • Lin, Jeffrey

Workers change occupation and industry less often in more densely populated areas, a relationship that had not been previously reported. This reduced-form result is robust to standard demographic controls, as well as to including aggregate measures of human capital and sectoral mix. Analysis of displaced worker surveys shows that this relationship is present in cases of involuntary separation as well. In contrast, we actually find the opposite result (higher rates of occupational and industrial switching) for the subsample of younger workers. These results provide evidence consistent with increasing-returns-to-scale matching in labor markets. Results from a back-of-the-envelope calibration suggest that this mechanism has an important role in raising both wages and returns to experience in denser areas.

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File URL: http://www.sciencedirect.com/science/article/pii/S0094119012000204
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Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 72 (2012)
Issue (Month): 2 ()
Pages: 87-103

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Handle: RePEc:eee:juecon:v:72:y:2012:i:2:p:87-103
DOI: 10.1016/j.jue.2012.04.003
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622905

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