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Local Labor Markets and Cyclic Components in Demand for College Trained Manpower

Author

Listed:
  • James P. Smith

    (RAND Corporation)

  • Finis R. Welch

    (UCLA & RAND Corporation)

Abstract

In this paper we examine earnings of synthetic cohorts contained in the Current Population Surveys (CPS) for each year 1968 to 1975. The CPS data are useful to test for the importance of local labor markets because individuals can be assigned to markets by calendar year and area of residence. We find that contrary to the established conviction, wage rates are sensitive to business cycles. This sensitivity appears, holding industry constant, to be skill neutral so that business cycle movements aparently explain little of the recent time series behavior of relative wages of college graduates. Furthermore, we have identified some important movements in wage rates among areas. These wage differentials seem more sensitive to employment deviations and trends than we at least initially expected.

Suggested Citation

  • James P. Smith & Finis R. Welch, 2004. "Local Labor Markets and Cyclic Components in Demand for College Trained Manpower," Labor and Demography 0403022, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpla:0403022
    Note: Type of Document - pdf; pages: 31. Annales de l'Insee, Number 30-31, 1978
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/lab/papers/0403/0403022.pdf
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    Cited by:

    1. Lemelin, Clément & Prud’homme, Philippe, 1994. "Le taux de rendement de l’éducation et la conjoncture économique : Québec, 1981-87," L'Actualité Economique, Société Canadienne de Science Economique, vol. 70(1), pages 27-41, mars.
    2. John A. Bishop & John P. Formby & Paul D. Thistle, 1999. "Mitigating Earnings Imputation Bias: Evidence from the CPS," Working Papers 9914, East Carolina University, Department of Economics.

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    JEL classification:

    • J - Labor and Demographic Economics

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