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Local Labor Markets and Human Capital Investments

Listed author(s):
  • Weinstein, Russell

    ()

    (University of Illinois at Urbana-Champaign)

I study whether human capital investments are based on local rather than national demand, and whether this is explained by migration or information frictions. I analyze three sector-specific shocks with differential local effects, including the dot-com crash, the 2008 financial crisis, and a shock transforming Delaware into an international financial center. I find universities in areas more exposed to sectoral shocks experience greater changes in sector-relevant majors. Using rich student-level data, I find this is not explained by information frictions, but more likely by migration frictions. The results suggest encouraging human capital investments based on national demand may increase mismatch.

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File URL: http://ftp.iza.org/dp10598.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 10598.

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Length: 82 pages
Date of creation: Feb 2017
Handle: RePEc:iza:izadps:dp10598
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