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Employment and Earnings of Disadvantaged Young Men in a Labor Shortage Economy

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  • Richard B. Freeman

Abstract

This study contrasts the economic position of youths across local labor markets that differ in their rates of unemployment using the annual merged files of the Current Population Survey and the National Longitudinal Survey of Youth. The paper finds: (1) Local labor market shortages raise the employment-population rate arid reduce the unemployment rate of disadvantaged youths by substantial amounts. (2) Shortages also raise the hourly earnings of disadvantaged youths. In the 19805 the earnings gains for youths in tight labor markets offset the deterioration in the real and relative earnings of the less skilled that marked this decade. (3) Youths in labor shortage areas had greeter increases in earnings as they aged than youths in other areas, implying that improved labor market conditions raise the longitudinal earnings profiles as well as the starting prospects of youths. These findings show that despite the social pathologies that plague disadvantaged youths, particularly less educated black youths, arid the 1980s twist in the American labor market against the less skilled, tight labor markets still operated to substantially improve their economic position.

Suggested Citation

  • Richard B. Freeman, 1990. "Employment and Earnings of Disadvantaged Young Men in a Labor Shortage Economy," NBER Working Papers 3444, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:3444
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    Cited by:

    1. R. Haveman & B. Knight, "undated". "The Effect of Labor Market Changes from the Early 1970s to the Late 1980s on Youth Wage, Earnings, and Household Economic Position," Institute for Research on Poverty Discussion Papers 1174-98, University of Wisconsin Institute for Research on Poverty.
    2. David G. Blanchflower & Andrew Oswald, 1995. "International Wage Curves," NBER Chapters,in: Differences and Changes in Wage Structures, pages 145-174 National Bureau of Economic Research, Inc.
    3. Timothy J. Bartik, 1993. "The Effects of Local Labor Demand on Individual Labor Market Outcomes for Diffrerent Demographic Groups and the Poor," Upjohn Working Papers and Journal Articles 93-23, W.E. Upjohn Institute for Employment Research.
    4. Bratsberg, Bernt & Turunen, Jarkko, 1996. "Wage curve evidence from panel data," Economics Letters, Elsevier, vol. 51(3), pages 345-353, June.
    5. Francine D. Blau & Lawrence M. Kahn & Jane Waldfogel, 2000. "Understanding Young Women's Marriage Decisions: The Role of Labor and Marriage Market Conditions," ILR Review, Cornell University, ILR School, vol. 53(4), pages 624-647, July.
    6. William Levernier & Mark D. Partridge & Dan S. Rickman, 2000. "The Causes of Regional Variations in U.S. Poverty: A Cross-County Analysis," Journal of Regional Science, Wiley Blackwell, vol. 40(3), pages 473-497.
    7. H. J. Holzer, "undated". "Employer Demand for Welfare Recipients and the Business Cycle: Evidence from Recent Employer Surveys," Institute for Research on Poverty Discussion Papers 1185-99, University of Wisconsin Institute for Research on Poverty.
    8. David C Ribar, 2000. "County-Level Estimates of the Employment Prospects of Low-Skill Workers," Working Papers 00-11, Center for Economic Studies, U.S. Census Bureau.
    9. J. Bound & Harry J. Holzer, "undated". "Structural changes, employment outcomes, and population adjustments among whites and blacks: 1980-1990," Institute for Research on Poverty Discussion Papers 1057-95, University of Wisconsin Institute for Research on Poverty.
    10. L. Quillian, "undated". "Migration Patterns and the Growth of High-Poverty Neighborhoods, 1970–1990," Institute for Research on Poverty Discussion Papers 1172-98, University of Wisconsin Institute for Research on Poverty.
    11. Xin Xu & Robert Kaestner, 2010. "The Business Cycle and Health Behaviors," NBER Working Papers 15737, National Bureau of Economic Research, Inc.
    12. Xu, Xin, 2013. "The business cycle and health behaviors," Social Science & Medicine, Elsevier, vol. 77(C), pages 126-136.
    13. Blanchflower, David G & Oswald, Andrew J, 1994. "Estimating a Wage Curve for Britain: 1973-90," Economic Journal, Royal Economic Society, vol. 104(426), pages 1025-1043, September.
    14. Bound, John & Holzer, Harry J, 2000. "Demand Shifts, Population Adjustments, and Labor Market Outcomes during the 1980s," Journal of Labor Economics, University of Chicago Press, vol. 18(1), pages 20-54, January.
    15. R. Haveman & B. Knight, "undated". "Youth Living Arrangements, Economic Independence, and the Role of Labor Market Changes: A Cohort Analysis from the Early 1970s to the Late 1980s," Institute for Research on Poverty Discussion Papers 1201-99, University of Wisconsin Institute for Research on Poverty.
    16. H. J. Holzer & S. Danziger, "undated". "Are Jobs Available for Disadvantaged Workers in Urban Areas?," Institute for Research on Poverty Discussion Papers 1157-98, University of Wisconsin Institute for Research on Poverty.
    17. Heather Boushey, 2002. "Reworking the Wage Curve: Exploring the consistency of the model across time, space and demographic group," Review of Political Economy, Taylor & Francis Journals, vol. 14(3), pages 293-311.
    18. Donal O'Neill, 2000. "Evaluating Labour Market Interventions," Economics, Finance and Accounting Department Working Paper Series n990300, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
    19. Michael Wasylenko, 1997. "Taxation and economic development: the state of the economic literature," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 37-52.

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