A Spatial Investigation of Urban Labor Markets.
Abstract: This thesis considers two different methods of analyzing
cross-sectional dependencies between city labor markets. First, it reports a spatial
investigation of Okun's Law in a panel of 348 U.S. Metropolitan Statistical Areas (MSAs)
using annual unemployment and GDP data from 2001-2010. Then, it considers a Global Vector
Autoregressive (GVAR) model of various labor market variables for... read more34 of the Northeast
Census Region cities. To the best of my knowledge, this is the first use of the GVAR
framework in modeling interlinkages between U.S. cities. Using spatial autoregressive
models to estimate Okun's Law coefficients for MSAs, I find that moderate to high
cross-sectional dependence exists between city labor markets, a result which is robust to a
number of different spatial proximity measures. In fact, more importantly I find that the
cross-sectional dependence increases as I change from distance- to economic-based measures.
Lastly, in decomposing the total effect of changes in the growth rate of real GDP on the
unemployment rate, I find that the indirect effect of growth in GDP in neighboring cities
dominates the direct effect of growth in local GDP. This result is relevant for a
discussion of whether or not place-based investment policies designed to alleviate high
local unemployment rates provide an advantage over policy designed at the federal level.
The main result derived from the GVAR model is that notably positive contemporaneous
relationships exist between cities in the Northeast for a number of labor market variables,
but there is no evidence of statistically significant spillover effects following
idiosyncratic shocks to the unemployment rates of the three largest MSAs by GDP (New York,
Boston, and Philadelphia). In fact, only a global shock to the regional job openings rate
has any statistically significant impact on city unemployment rates.
Thesis (M.S.)--Tufts University, 2013.
Submitted to the Dept. of Economics.
Advisor: Yannis Ioannides.
Committee: Marcelo Bianconi, and Adam Storeygard.
Keywords: Economics, and Economics, Labor.read less