Employment Risk in U.S. Metropolitan and Nonmetropolitan Regions: the Influence of Industrial Specialization and Population Characteristics

Abstract

A dynamic labor market model is used to motivate the inclusion of population characteristics and industrial structure as determinants of regional employment instability. We examine how these factors influence regional employment instability using data from both metropolitan and nonmetropolitan regions in the United States. We find that population characteristics are important determinants of employment volatility and that increased industrial specialization (reduced diversification) increases employment volatility, but the magnitude of that influence drops substantially once population characteristics are considered. We also find that the influence of population characteristics and industrial specialization varies significantly across metropolitan and nonmetropolitan regions.

Unconventional Gas and Oil Development in the United States: Economic Experience and Policy Issues

“…First the aforementioned boom-bust cycle is not attractive to businesses outside of the energy sector wanting to invest in such locations due to the heightened risk and costs. Likewise, overconcentration in any sector-including energy-is not conducive to growth as diversified economies outperform local economies concentrated in a few sectors (Hammond and Thompson, 2004). A third reason for a potential natural resource curse is that the natural resource sector can crowd out other economic activities because land and labor costs are bid up during boom periods.…”

Regional origins of employment volatility: evidence from German states

“…They find significant heterogeneity in the timing and the magnitude of reductions in state-level employment volatility. Hammond and Thompson (2004) study the impact of industrial and demographic characteristics for regional employment volatility in the US. Both papers do not address the impact of openness on volatility.…”

“…This can be shown using a model of regional labor markets as suggested by Blanchard and Katz (1992) and applied to an analysis of employment volatility by Hammond and Thompson (2004 …”

“…For example, workers who are attached to a specific region or who have more non-labour income will be less inclined to migrate due to a shock that influences labor markets (Hammond and Thompson 2004).…”

Employment Risk, Returns, and Entrepreneurship

“…Tolbert and Sizer (1996) define two areal units that encompass regional labor markets: CZ (n = 741) and more aggregated LMAs (n = 394), both of which can cross state lines, are the product of a consistent methodology, and include rural counties (Hammond & Thompson, 2004). Tolbert and Sizer (1996) define two areal units that encompass regional labor markets: CZ (n = 741) and more aggregated LMAs (n = 394), both of which can cross state lines, are the product of a consistent methodology, and include rural counties (Hammond & Thompson, 2004).…”