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Title: Migration and Occupational Mobility in the United

Citation Type: Miscellaneous

Publication Year: 2022

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Abstract: The degree to which labor markets are well integrated across space and occupation has important welfare and distributional consequences for workers1. This is especially true in the United States, where the economy having high occupational and geographic mobility are essential elements of the American story (Ferrie 2005). One version of this story is that a national labor market emerged in the United States after the Civil War. How this integration unfolded unevenly matters in understanding the evolution of different parts of the American economy2. Until recently economic historians have had to rely on uneven data and approaches to measure labor market integration (Kim 98). Common approaches involved comparing aggregate population and occupation trends over time or relied on myopic wage and price data to make inferences about larger regions (Rosenbloom 90). Today the availability of high-quality US census data at the individual level provides economic historians with new opportunities to better measure labor market integration (Abramitzky et al 2017). This paper uses a discrete version of the dynamic approach employed in Artuc and McLaren (2015) to measure switching costs faced by workers when moving between different locations or occupations. As labor markets become better integrated, these costs should approach zero. Studying the period between 1850 to 1880 and 1900 to 1940 decade by decade shows that the fixed costs of changing location or occupation increased between 1850 to 1880 and declined during the 20th century. Though direct comparisons of the two costs are not possible, the fixed costs of changing location fell roughly 15 percent while fixed costs of changing occupation fell roughly 25 percent. Even when a labor market is well integrated, the welfare gains depend on the details of this integration. One can imagine a labor market that may be well integrated because low-skilled workers face low switching costs when moving between low-skilled occupations or across locations but still face large hurdles when transitioning out of low-skilled work. To better measure occupational integration in the United States, additional costs for workers in low-skilled occupation groups when transitioning into the high-skilled occupation group are also estimated. These costs also decline through time, except for farmers whose costs of switching into high-skilled labor increase with time. In particular, the costs faced by unskilled workers transitioning into high-skilled work declined nearly 45 percent while the costs faced by farmers increased by 8 percent. This paper contributes to three strands of literature. The first is the literature already discussed above that focuses on quantifying labor market integration in the US during this period. This literature (Wright 1986, 1987, Rosenbloom 1990, Collins and Wannamaker 2015, and Mitchener and McLean 1998) highlight two commonly observed trends. The first is that labor market integration increased during this period. The second is that Southern labor markets were uniquely different from the rest of the country. The evidence supports the first point and potentially the second point since farmers faced higher costs, and the South had a greater share of workers in agriculture than other parts of the country. The second literature is one that includes the intersection of trade theory and American economic history. For example, Kim (1998) and Steinwender (2018) have taken trade theory to historical data to improve our understanding of important economic forces at the time. In addition, Artuc et al (2010) have generated models that are uniquely suited to the constraints of this historical setting. This paper provides another example of how these rich models can be combined with historical data to continue improving our understanding of the time period. The final literature this paper contributes to is one studying the effect of changes in migration patterns in the US. Abramitzky and Boustan (2017) summarize some of their and much of the other work done in this area, often using linked census data to measure immigrant outcomes. Ferrie (2005) and Salisbury (2014) focus on the effect of differential changes in migration rates across space, in particular declining rates of migration across state lines. Caselli and Coleman (2001) and Alston and Hatton (1991) highlight the impacts of the changing composition of the labor force during this period as agriculture lost its majority share of the workforce. This paper contributes to this literature as well by showing that these declining migration rates in conjunction with declining costs provide evidence of increasing labor market integration. This paper also shows that farmers faced statistically different costs compared to other groups when transitioning into high-skilled work.

Url: http://matthewhurteconomist.com/papers/Switching_Costs.pdf

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Authors: Hurt, Matthew

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Data Collections: IPUMS USA - Ancestry Full Count Data

Topics: Labor Force and Occupational Structure, Migration and Immigration

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