CUPC Presentation: Rick Mansfield

Rick Mansfield, Economics, University of Colorado-Boulder

"How Local Are U.S. Labor Markets?: Using an Assignment Model to Forecast the Geographic Incidence of Local Labor Demand Shocks."

This paper examines the welfare incidence of across locations and demographic groups for labor demand shocks featuring particular geographic and firm type compositions. LEHD data on the near universe of U.S. job transitions are used to estimate a rich two-sided assignment model of the labor market featuring thousands of parameters that is then used to generate simulated forecasts of many alternative local shocks. These forecasts suggest that existing local workers account for only 0.1\% (2.7\%) of total welfare (employment) gains, with 80\% (56\%) of welfare (employment) gains accruing to out-of-state workers. This is despite the fact that projected employment rate increases from a typical positive shock are 7 times larger for existing workers in the targeted Census tract than for workers from an adjacent tract, because workers in the target tract are a minuscule share of the national labor market. Further, the projected earnings incidence across local skill groups is highly sensitive to the shock's firm type composition.