Regional Labor Market Adjustments in the United States and Europe

By Mai Dao, Davide Furceri, Prakash Loungani

February 11, 2014

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Mai Dao, Davide Furceri, and Prakash Loungani. Regional Labor Market Adjustments in the United States and Europe, (USA: International Monetary Fund, 2014) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

We examine patterns of regional adjustments to shocks in the US during the past 40 years. Using state-level data, we estimate the dynamic response of regional employment, unemployment, participation rates and net migration to state-relative labor demand shocks. We find that (i) the long-run effect of a state-specific shock on the state employment level has decreased over time, suggesting less overall net migration in response to a regional shock, (ii) the role of the participation rate as absorber of regional shocks has increased, (iii) the response of net migration to regional shocks is stronger, while that of relative unemployment is weaker during aggregate downturns, and (iv) the change in the response intensity of migration is related to the declining trend in regional dispersion of labor market conditions. Finally, using regional data for a set of 21 European countries, we show that while the short-term response of participation rates to labor demand shocks is typically larger in Europe than in the US, the immediate response of net migration in Europe has increased over time.

Subject: Employment, Labor, Labor demand, Labor markets, Migration, Population and demographics, Unemployment rate

Keywords: ACS migration, Employment, Employment growth, Europe, Internal migration, Interstate migration, Labor demand, Labor demand shock, Labor force, Labor markets, Labor mobility, Migration, Migration data, Migration rate, Migration response, Regional labor markets, Unemployment rate, WP

Publication Details

Pages:

37
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2014/026
Stock No:

WPIEA2014026
ISBN:

9781475598476
ISSN:

1018-5941

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