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| Where the Jobs Are; Urban Density and Employment Trends | |
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| Tweet Topic Started: Mar 27 2009, 05:00 PM (172 Views) | |
| Jeff | Mar 27 2009, 05:00 PM Post #1 |
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Senior Carp
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http://economix.blogs.nytimes....etter-in-hard-times/ How Some Places Fare Better in Hard Times By EDWARD L. GLAESER Edward L. Glaeser is an economics professor at Harvard. The whole world seems to have been touched by the current recession, but that doesn’t mean that it has touched every place equally. Last week, the Bureau of Labor Statistics released data on January unemployment rates across metropolitan areas, and the heterogeneity across space is staggering. Some places, like Ames, Iowa, or Lafayette, La., have unemployment rates that are less than 4 percent. At the other end of the spectrum, El Centro, Calif., has an unemployment rate of 24.2 percent and the rate in Flint, Mich., is over 14 percent. Between December and January, the number of metropolitan areas in California with double-digit unemployment rates rose from 15 to 18. The number of metropolitan areas in Michigan with double-digit unemployment increased from 7 to 12. Ohio went from having no double-digit unemployment areas in December to having seven; Florida also now has seven such areas, up from four the previous month. While the disparity in unemployment rates is enormous, it isn’t random. Some areas aren’t just miraculously better able to handle the downturn. Long-standing features of the urban landscape can explain the bulk of the variation in today’s unemployment rates. Given the enormous gap in unemployment between skilled and unskilled workers, it isn’t surprising that skills best explain today’s metropolitan unemployment rates. The share of adults with college degrees in 2000 can, on its own, explain about one-half of the variation in the unemployment rate. Somewhat remarkably, the educational level of the metropolitan area before World War II can do almost as well. The attached figure shows that as the share of the population with college degrees in 1940 increases by 10 percent, current unemployment levels decrease by 6.7 percent. The enormously tight connection between skills and unemployment should remind us of the importance of investing in human capital. Skills drive the success of individuals, cities and nations. America’s future rests on the human capital of its population. But factors other than skills help predict the current unemployment rate. Unemployment today, as in previous recessions, is strongly linked to manufacturing. Old-line industries, like car manufacturing, have been declining for decades, and such industries are also more likely to lay off masses of workers during a downturn. As in the case of education, history does almost as well as predicting current unemployment as more recent variables. The figure below shows the correlation between current unemployment and the share of the labor force in manufacturing as of 1970. This second correlation also has a moral for government policy: Beware industrial policies aimed at keeping America tied to heavy industry. The track record of manufacturing cities over the past 50 years is dismal; artificially boosting the automobile industry seems unlikely to do any long-term good. A third variable that predicts the level of unemployment is the centralization of the metropolitan area. About five years ago, the U.C.L.A. economist Matthew Kahn and I wrote a couple of papers about sprawl in America’s cities. One benchmark measure of decentralization that we used was the share of employment in ZIP codes that were within five miles of the metropolitan area’s urban center. As the next figure shows, January’s unemployment is lowest in those areas that are most centralized. While it is true that skilled places are more centralized, and manufacturing cities are less so, this effect continues to be statistically significant even when I control for skills and manufacturing. I’m not completely sure why this relationship exists or what it means for government policy. I wouldn’t want to leap from this correlation to a wholesale endorsement of encouraging more centralized development. Yet the facts do suggest that smart people, connected by urban density, are doing a better job of dealing with adversity. While the regional diversity within the United States might prompt politicians to pursue policies that target aid to distressed regions, that seems likely to be counterproductive. America has always dealt with regional economic disparities through migration. During the recessions, thousands fled the Dust Bowl. In the 1970s and 1980s, there was a massive exodus from the Rust Belt. Today’s recession will also prompt mobility, probably toward more skilled, more centralized cities with less historical commitment to manufacturing. Government policies that try to bolster declining regions would artificially reduce that productivity-enhancing mobility. It would be far wiser to focus on aid that helps poor people rather than to throw money at poor places. |
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| Jolly | Mar 28 2009, 05:34 PM Post #2 |
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Geaux Tigers!
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Lafayette is oil field. |
| The main obstacle to a stable and just world order is the United States.- George Soros | |
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4:12 PM Jul 10