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Local Labor Markets and Human Capital Investments

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  • Weinstein, Russell

    (University of Illinois at Urbana-Champaign)

Abstract

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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  • Weinstein, Russell, 2017. "Local Labor Markets and Human Capital Investments," IZA Discussion Papers 10598, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp10598
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    Cited by:

    1. Weinstein, Russell, 2018. "Dynamic responses to labor demand shocks: Evidence from the financial industry in Delaware," Journal of Urban Economics, Elsevier, vol. 106(C), pages 27-45.
    2. Shimeng Liu & Weizeng Sun & John V. Winters, 2019. "Up In Stem, Down In Business: Changing College Major Decisions With The Great Recession," Contemporary Economic Policy, Western Economic Association International, vol. 37(3), pages 476-491, July.
    3. Aalto, Aino-Maija & Müller, Dagmar & Tilley, J. Lucas, 2023. "From epidemic to pandemic: Effects of the COVID-19 outbreak on high school program choices in Sweden," Labour Economics, Elsevier, vol. 82(C).
    4. Weinstein, Russell, 2018. "Employer screening costs, recruiting strategies, and labor market outcomes: An equilibrium analysis of on-campus recruiting," Labour Economics, Elsevier, vol. 55(C), pages 282-299.
    5. Furtado, Delia & Kong, Haiyang, 2021. "How Do Low-Skilled Immigrants Adjust to Chinese Import Shocks? Evidence Using English Language Proficiency," IZA Discussion Papers 14152, Institute of Labor Economics (IZA).
    6. Andrew Weaver, 2021. "Hiring Frictions in a Regulated Occupation: Evidence from US Laboratories," British Journal of Industrial Relations, London School of Economics, vol. 59(3), pages 899-927, September.
    7. Ersoy, Fulya Y., 2020. "The effects of the great recession on college majors," Economics of Education Review, Elsevier, vol. 77(C).
    8. Weinstein, Russell, 2021. "Graduating from a Less Selective University during a Recession: Evidence from Mobility Report Cards and Employer Recruiting," IZA Discussion Papers 14462, Institute of Labor Economics (IZA).
    9. Weinstein, Russell, 2017. "Geography and Employer Recruiting," IZA Discussion Papers 11224, Institute of Labor Economics (IZA).
    10. Han, Luyi & Winters, John V., 2020. "Industry Fluctuations and College Major Choices: Evidence from an Energy Boom and Bust," Economics of Education Review, Elsevier, vol. 77(C).
    11. Aalto, Aino-Maija & Müller, Dagmar & Tilley, J. Lucas, 2021. "From Epidemic to Pandemic: Did the COVID-19 Outbreak Affect High School Program Choices in Sweden?," Working Paper Series 1420, Research Institute of Industrial Economics.

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    More about this item

    Keywords

    information frictions; migration frictions; local labor markets; college major choice;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • I20 - Health, Education, and Welfare - - Education - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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