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The Geography of Job Creation and Job Destruction

Author

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  • Kuhn, Moritz

    (University of Bonn)

  • Manovskii, Iourii

    (University of Pennsylvania)

  • Qiu, Xincheng

    (University of Pennsylvania)

Abstract

Spatial differences in labor market performance are large and highly persistent. Using data from the United States, Germany, and the United Kingdom, we document striking similarities in spatial differences in unemployment, vacancies, job finding, and job filling within each country. This robust set of facts guides and disciplines the development of a theory of local labor market performance. We find that a spatial version of a Diamond-Mortensen-Pissarides model with endogenous separations and on-the-job search quantitatively accounts for all the documented empirical regularities. The model also quantitatively rationalizes why differences in job-separation rates have primary importance in inducing differences in unemployment across space while changes in the job-finding rate are the main driver in unemployment fluctuations over the business cycle.

Suggested Citation

  • Kuhn, Moritz & Manovskii, Iourii & Qiu, Xincheng, 2021. "The Geography of Job Creation and Job Destruction," IZA Discussion Papers 14791, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp14791
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    Cited by:

    1. Jessen, Jonas & Jessen, Robin & Galecka-Burdziak, Ewa & Góra, Marek & Kluve, Jochen, 2023. "The Micro and Macro Effects of Changes in the Potential Benefit Duration," IZA Discussion Papers 15978, Institute of Labor Economics (IZA).
    2. Antonia Díaz & Álvaro Jáñez & Felix Wellschmied, 2023. "Geographic Mobility Over the Life-cycle," Documentos de Trabajo del ICAE 2023-01, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.
    3. Dolado, Juan J & Lalé, Etienne & Turon, Hélène, 2021. "Zero-hours Contracts in a Frictional Labor Market," CEPR Discussion Papers 16843, C.E.P.R. Discussion Papers.
    4. Julien Pascal, 2022. "Local employment dynamics and communtig costs," BCL working papers 167, Central Bank of Luxembourg.
    5. Honey Batra & Amanda M. Michaud & Simon Mongey, 2023. "Online Job Posts Contain Very Little Wage Information," Opportunity and Inclusive Growth Institute Working Papers 083, Federal Reserve Bank of Minneapolis.
    6. Diaz, Antonia & Jáñez, Álvaro & Wellschmied, Felix, 2023. "Geographic Mobility over the Life-Cycle," IZA Discussion Papers 15896, Institute of Labor Economics (IZA).
    7. Pizzinelli, Carlo & Shibata, Ippei, 2023. "Has COVID-19 induced labor market mismatch? Evidence from the US and the UK," Labour Economics, Elsevier, vol. 81(C).

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    More about this item

    Keywords

    local labor markets; unemployment; vacancies; search and matching;
    All these keywords.

    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
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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