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Spatial Changes in Labour Market Inequality

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  • Lindley, Joanne

    () (King's College London)

  • Machin, Stephen

    () (London School of Economics)

Abstract

We study spatial changes in labour market inequality for US states and MSAs using Census and American Community Survey data between 1980 and 2010. We report evidence of significant spatial variations in education employment shares and in the college wage premium for US states and MSAs, and show that the pattern of shifts through time has resulted in increased spatial inequality. Because relative supply of college versus high school educated workers has risen faster at the spatial level in places with higher initial supply levels, we also report a strong persistence and increased inequality of spatial relative demand. Bigger relative demand increases are observed in more technologically advanced states that have experienced faster increases in R&D and computer usage, and in states where union decline has been fastest. Finally, we show the increased concentration of more educated workers into particular spatial locations and rising spatial wage inequality are important features of labour market polarization, as they have resulted in faster employment growth in high skill occupations, but also in a higher demand for low wage workers in low skill occupations. Overall, our spatial analysis complements research findings from labour economics on wage inequality trends and from urban economics on agglomeration effects connected to education and technology.

Suggested Citation

  • Lindley, Joanne & Machin, Stephen, 2013. "Spatial Changes in Labour Market Inequality," IZA Discussion Papers 7600, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp7600
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    Cited by:

    1. Charlotte Senftleben-Koenig & Hanna Wielandt, 2014. "Spatial Wage Inequality and Technological Change," SFB 649 Discussion Papers SFB649DP2014-038, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    2. Vives Coscojuela, Cecilia, 2016. "Human Capital and Market Size," IKERLANAK Ikerlanak;2016-98, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
    3. Combes, Pierre-Philippe & Gobillon, Laurent, 2015. "The Empirics of Agglomeration Economies," Handbook of Regional and Urban Economics, Elsevier.
    4. Carlino, Gerald & Kerr, William R., 2015. "Agglomeration and Innovation," Handbook of Regional and Urban Economics, Elsevier.
    5. Ana Maria Bonomi Barufi, 2014. "Regional labor markets in Brazil: the role of skills and agglomeration economies," Working Papers, Department of Economics 2014_18, University of São Paulo (FEA-USP).
    6. Winters, John V., 2014. "The Production and Stock of College Graduates for U.S. States," IZA Discussion Papers 8730, Institute for the Study of Labor (IZA).
    7. Machin, Stephen, 2014. "Developments in economics of education research," Labour Economics, Elsevier, vol. 30(C), pages 13-19.
    8. David Jinkins & Farid Farrokhi, 2017. "Wage inequality and the Location of Cities," 2017 Meeting Papers 924, Society for Economic Dynamics.
    9. Owens, Mark F. & Rennhoff, Adam D., 2014. "Provision and price of child care services: For-profits and nonprofits," Journal of Urban Economics, Elsevier, vol. 84(C), pages 40-51.
    10. Furtado, Delia & Song, Tao, 2014. "Trends in the Returns to Social Assimilation: Earnings Premiums among U.S. Immigrants that Marry Natives," IZA Discussion Papers 8626, Institute for the Study of Labor (IZA).
    11. Malgouyres, Clément, 2014. "Chinese imports competition’s impact on employment and the wage distribution: evidence from French local labor markets," Economics Working Papers ECO2014/12, European University Institute.
    12. repec:bof:bofrdp:urn:nbn:fi:bof-201512111472 is not listed on IDEAS
    13. Gould, Eric D., 2015. "Explaining the Unexplained: Residual Wage Inequality, Manufacturing Decline, and Low-Skilled Immigration," IZA Discussion Papers 9107, Institute for the Study of Labor (IZA).
    14. Francis Green & Golo Henseke, 2016. "The changing graduate labour market: analysis using a new indicator of graduate jobs," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-25, December.
    15. Ana Maria Bonomi Barufi & Eduardo Amaral Haddad & Peter Nijkamp, 2016. "Industrial scope of agglomeration economies in Brazil," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(3), pages 707-755, May.
    16. Charlotte Senftleben-König & Hanna Wielandt, 2014. "Spatial Wage Inequality and Technological Change," Working Papers 2014008, Berlin Doctoral Program in Economics and Management Science (BDPEMS).
    17. Yuming Fu & Yang Hao, 2015. "An Urban Accounting for Geographic Concentration of Skills and Welfare Inequality," ERSA conference papers ersa15p734, European Regional Science Association.

    More about this item

    Keywords

    polarization; relative demand; spatial changes; education shares; college wage premium;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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