The Geography of American Labor Market Attachment

Virgilio Urbina Lazardi, New York University

This paper takes up the puzzle of labor force participation in the United States, which has continued to trend downward since the turn of the century. It mobilizes Census and other public data to exploit the enormous geographic and social variation that exists across the country, linking the extent and kind of job polarization - that is, the relative decline of middle-skilled employment - in MSAs to exits from the labor force, especially of prime-age men without a college degree. Broadly, it concludes that polarization, while a necessary condition, is insufficient on its own to explain the decline. Certain additional key socio-economic variables, such as the cost of housing, relocation expenses, and the presence of agglomeration effects to high-skill employment (or lack thereof), come together to induce labor market detachment. Consequently, the paper argues that policy proposals that focus principally on human capital formation fail to capture the holistic and geographically disparate nature of the problem at hand. Finally, it comments on the partial but fragile recovery of labor force participation in the post-COVID boom. Without a more thoroughgoing alteration in the geography of labor market opportunity, the re-entrance of formerly discouraged workers into the labor force will likely prove short-lived.

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 Presented in Session 24. Evolution and Change in Labor Markets