The Employment Cycles of Neighboring Cities

This paper examines the spatial interaction of neighboring cities over their employment cycles. The cycles of neighboring cities tend to be more similar to one another than are those of non-neighboring cities, although this is due primarily to neighbors’ tendency to be in the same state. In addition to these same-state effects, neighborness interacts with industry and human capital in ways that make the cyclical interaction of neighbors different from that of non-neighbors. Specifically, neighboring cities with similar levels of educational attainment and establishment size tend to have more-similar employment cycles, but neighboring cities with similar racial compositions tend to have less-similar employment cycles.