LSE Business Review blog:
If we want to create jobs in local areas, the idea of `local? needs to be revisited
1 December 2017
New job openings attract not only local workers, but also those living relatively near, write Alan Manning and Barbara Petrongolo. Place-based policies that target disadvantaged areas are widespread in both high-income and developing countries. Their impact depends crucially on the effective size of local labour markets. If labour markets are very local, an effective intervention needs to be targeted to the disadvantaged areas themselves and more distant interventions will not benefit the target group. If labour markets are not as local, targeted intervention is ineffective as it may simply benefit workers from other, more advantaged areas. A broader question concerns the incidence of local shocks to labour demand and their impact on labour mobility.
Related publications
How Local Are Labor Markets? Evidence from a Spatial Job Search Model, Alan Manning and Barbara Petrongolo, American Economic Journal, Volume 107(10)October 2017
http://pubs.aeaweb.org/doi/pdfplus/10.1257/aer.20131026 ; DOI: 10.1257/aer.20131026