Spatial changes in labour market inequality

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu We study spatial changes in labour market inequality for US states and MSAs using Census and American Community Survey data between 1980 and 2010. We report evidence of significant spatial variations in education employment shares and in the college wage premium for US states and MSAs, and show that the pattern of shifts through time has resulted in increased spatial inequality. Because relative supply of college versus high school educated workers has risen faster at the spatial level in places with higher initial supply levels, we also report a strong persistence and increased inequality of spatial relative demand. Bigger relative demand increases are observed in more technologically advanced states that have experienced faster increases in R&D and computer usage, and in states where union decline has been fastest. Finally, we show the increased concentration of more educated workers into particular spatial locations and rising spatial wage inequality are important features of labour market polarization, as they have resulted in faster employment growth in high skill occupations, but also in a higher demand for low wage workers in low skill occupations. Overall, our spatial analysis complements research findings from labour economics on wage inequality trends and from urban economics on agglomeration effects connected to education and technology. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SJEL Classification: J31, R11

The Empirics of Agglomeration Economies

“…For instance, Bacolod et al (2009a) and Abel et al (2012) for the US, Di Addario and Patacchini (2008) for Italy, and for the Netherlands, confirm the intuition that returns to education are higher in cities. This is also found by Lindley and Machin (2014) for the US who then assess to what extent the change in wage inequality across States over the 1980-2010 period arises from a shift in skill composition and a variation in education-specific returns to agglomeration economies. Firms in industries that are more skill-intensive should be concentrated where returns to education are higher, the larger cities, and this is observed by Elvery (2010) for US metropolitan areas.…”

The changing graduate labour market: analysis using a new indicator of graduate jobs

“…There is some evidence, however, of differentiation in the returns along varied dimensions (e.g. Martins and Pereira 2004;Hoekstra 2009;Green and Zhu 2010;Altonji et al 2012;Figueiredo et al 2013;Lindley and Machin 2014). Differentiation reflects a combination of within-group skill heterogeneity and disequilibrium in the graduate labour market, consistent with a range of labour market theories (McGuinness 2006).…”

The Production and Stock of College Graduates for U.S. States

“…This is true for education, but also for other characteristics. A second yet quite different explanation is that high human capital workers may be becoming increasingly complementary with other high human capital workers causing high human capital workers to cluster in specific areas and average human capital levels to diverge across space as suggested by Berry and Glaeser (2005), Moretti (2013), and Lindley and Machin (2014). The analysis here is unable to shed much light on how important these factors are for explaining the increased production-stock coefficient over time, but this increase is an important empirical finding in need of future research.…”