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Moving to Fluidity: Regional Growth and Labor Market Churn

Author

Listed:
  • Eran B. Hoffmann
  • Monika Piazzesi
  • Martin Schneider

Abstract

This paper studies the connection between regional growth trends and labor market dynamics. New data on manufacturing worker flows for U.S. cities 1969-1981 show more new hires and more voluntary quits in growing cities, but more forced layoffs in shrinking cities. Recessions are special in growing cities in that hires and quits drop, whereas in shrinking cities layoffs rise. A quantitative business cycle model with migration and on-the-job search accounts for a large share of variation in growth and worker flows both over time and across space. Growing cities in the South and West had low job creation costs and only gradual in-migration, so tight labor markets encouraged more on-the-job search. In those cities, aggregate job destruction shocks generated recessions with lower labor market churn. In the shrinking cities of the Rust Belt, in contrast, churn was always low and responded little in recessions.

Suggested Citation

  • Eran B. Hoffmann & Monika Piazzesi & Martin Schneider, 2025. "Moving to Fluidity: Regional Growth and Labor Market Churn," NBER Working Papers 34515, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34515
    Note: EFG LS
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    More about this item

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • 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
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • 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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