C H A P T E R T W E N T Y - T H R E E Urban Labor Markets INTRODUCTION Why should we care about urban labor markets? To some this might seem like a rhetorical question, since it is difficult not to include urban areas when studying labor markets. | A Companion to Urban Economics Edited by Richard J. Arnott Daniel P. McMillen Copyright 2006 by Blackwell Publishing Ltd CHAPTER TWENTY-THREE Urban Labor Markets Timothy J. Bartik and Randall W. Eberts Introduction Why should we care about urban labor markets To some this might seem like a rhetorical question since it is difficult not to include urban areas when studying labor markets. Over 80 percent of the US population lives in metropolitan areas. In this respect most labor-market analysis is urban labor-market analysis. Yet the focus on the urban aspect of labor markets is much more profound than simply tallying up the number of people who live in urban areas. The fact that people work and live in a specific location and that markets respond to the attributes of their location is what makes studying urban labor markets so important. Adding the urban to labor-market analysis therefore is to add the spatial proximity of place of residence with place of work. Thus one needs to understand the interaction between the location of households and businesses and the institutions and site-specific characteristics that affect the choice of location in order to gain a fuller understanding of the factors that affect wages employment rates and earnings not only in urban markets but also in national ones. Moreover since the effectiveness of many government policies depends upon the circumstances at specific sites accounting for urban attributes also enhances our understanding of policy outcomes. This chapter focuses on key features of the urban spatial landscape that influence labor-market outcomes. In particular we look at what constitutes an urban labor market provide the framework to model the simultaneous decisions of residential and workplace location identify the key features determining the interaction of demand and supply in urban labor markets and review the evidence on how shifts in labor demand or supply occurring naturally or due to policy affect labor-market
