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Title: Housing Booms, Manufacturing Decline, and Labor Market Outcomes
Citation Type: Miscellaneous
Publication Year: 2016
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Abstract: We assess the extent to which manufacturing decline and local housing booms contributed to changes in labor market outcomes during the 2000s. Using a local labor markets design, we estimate that manufacturing decline significantly reduced employment between 2000 and 2006, while local housing booms increased employment by roughly the same magnitude. The effects of manufacturing decline persist through 2012, but we find no persistent employment effects of local housing booms, likely because housing booms were associated with subsequent busts of similar magnitude. These results suggest that housing booms masked negative employment growth that would have otherwise occurred earlier in the absence of the booms. This masking was strongest for low-skilled men and women, although high-skilled men and women were affected, as well; additionally, masking occurred both within and between cities during this time period. Applying our local labor market estimates to the national labor market, we find that roughly 40 percent of the reduction in employment during the 2000s can be attributed to manufacturing decline and that these negative effects would have appeared in aggregate employment statistics earlier had it not been for the large, temporary increases in housing demand.
Url: http://faculty.wcas.northwestern.edu/noto/research/CHN_manuf_decline_housing_booms_mar2016.pdf
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Authors: Charles, Kerwin Kofi; Hurst, Erik; Notowidigdo, Matthew J
Publisher: NBER
Data Collections: IPUMS USA
Topics: Housing and Segregation, Labor Force and Occupational Structure
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