Sectoral Shocks and Metropolitan Employment Growth

In this paper, we study the sources of industry employment growth in each of five metropolitan statistical areas (MSAs). The objective is to understand the relative importance of aggregate disturbances versus local sectoral shocks in generating observed employment fluctuations at the MSA level. The empirical evidence presented in this paper derives from structural vector autoregressions (SVARs), estimated for each of the five MSAs. Estimations use monthly employment data covering nine one-digit industrial categories for the period 1951:1–1999:8, as well as two variables that capture the influences of aggregate (i.e., national) shocks on MSAs. We find that within-MSA industry shocks explain considerably more of the forecast error variance in industry employment growth than do aggregate shocks. Sectoral shocks account for between 87 and 94% of the 36-month-ahead forecast error variance. Among individual local sectors, shocks to MSA-specific government, manufacturing, and service sector employment growth are the predominate sources of variability.     

A model for manpower, employment, training and education

The increasing refinement and variety of economic projections can give the educational planner an extremely useful tool, providing he can find a way to convert sectoral projections of employment into educational requirements. In this study occupational data from the Census of 1960 were converted directly into their vocational educational equivalents so that cross-classifications by (SIC) sector permitted the derivation of sectoral employment/education coefficients. These coefficients, multiplied by projected employment in each sector, give projected employment in terms of the vocational preparation which is implied.

Using this approach, vocational preparation requirements were projected to 1975 for the fifty states and 224 metropolitan areas. The results thus generated show the variety which can be anticipated among the various regions in the United States, and can provide guidance to local and state educational groups in setting up programs at state and local levels.

A similar approach which used various national projections led to two conclusions. The level of sectoral detail can have quite important impacts on the “mix” of training requirements which results, suggesting that projections of this type must be based on quite detailed sectoral employment breakdowns. Second, shifts in patterns of growth can have marked impacts on some types of vocational training requirements while needs for other types remain relatively unaffected.     

Self-employment and job generation in metropolitan areas, 1969–2009

Many regional development policy initiatives assume that entrepreneurial activities promote economic growth. Empirical research has presented rationale for this argument showing that small firms create proportionally more new jobs than large firms. However, little research has been performed on the issue of net job generation at the urban level, particularly when self-employment is considered as an indicator of entrepreneurial activities. This paper investigates to what extent US metropolitan areas in the 1969–2009 period characterized by relatively high rates of self-employment also have shown relatively high rates of subsequent total employment growth. The analysis corrects for the influence of sectoral composition, wage level, educational attainment, presence of research universities and size of the metropolitan area to measure the extent to which the number and quality of self-employed in a region contribute to total employment growth. It finds the relationship between self-employment rates and subsequent total employment growth to be positive on average during the 40-year period but to weaken over time.     

The government wage bill and private activity

We estimate the macroeconomic effects of public wage expenditures in U.S. data by identifying shocks to public employment and public wages using sign restrictions. We find that public employment shocks are mildly expansionary at the federal level and strongly expansionary at the state and local level by crowding in private consumption and increasing labor force participation and private sector employment. Similarly, state and local government wage shocks lead to increases in consumption and output, while shocks to federal government wages induce significant contractionary effects. In a stylized DSGE model we show that the degree of complementarity between public and private goods in the consumption bundle is key for explaining the observed heterogeneity.     

The role of startups for local labor markets

There are substantial differences in startup activity across US local labor markets. We study the causes and consequences of these differences. Startup productivity shocks are found to drive much of these cross-city differences in startup activity. Examples of such shocks include breakthroughs in biotech that spurred startup formation in San Diego and Philadelphia. Overall, these shocks explain half of the forecast error variance of startup job creation, accounting for 40% of population growth and long-run changes in employment. Shocks to barriers to firm entry have economy-wide effects similar to those of startup productivity shocks but operate largely through the number of startups, rather than their size. We use a novel spatial panel vector autoregression, identifying shocks using shift–share external instruments.     

The topography of metropolitan employment: Identifying centers of employment in a polycentric urban area

While it is well recognized that US metropolitan areas are polycentric, there is little consensus as to the appropriate method for identifying concentrations of employment within them. Existing methods suffer from strong assumptions about parametric form, misspecification, or reliance on local knowledge to calibrate model parameters. This paper introduces a new nonparametric method for identifying subcenters. Results indicate that this, more flexible, nonparametric approach yields greater accuracy with regard to both urban and suburban centers compared with other approaches. This approach should provide better data for the numerous topics that depend on the spatial accounting of employment within metropolitan areas.     

Economic Structure and Local Growth: France, 1984–1993

For 52 industry sectors and 42 services sectors, this paper tests how the local economic structure (local sectoral specialization and diversity, competition, average size of plants, and total employment density) affects the 1984–1993 employment growth of 341 local areas. These areas entirely and continuously cover the French territory. The impact of the local economic structure differs in industry and services. In industrial sectors, local total employment density, competition, and plant size always reduce local growth. Sectoral specialization and diversity have a negative impact on growth, but also increase the growth of a few sectors. Service sectors always exhibit negative specialization effects and positive diversity effects. Competition and plant size have a negative impact and density a positive one, but exceptions are observed for some sectors.     

A study of the employment system of Japanese multinational retailers in Hong Kong

This study examines the employment system of Japanese multinational retailing corporations in Hong Kong through two case companies - Morioka and Okadaya. The human resource management (HRM) practices- recruitment and selection, remuneration, and training and development - of the companies are studied. The different HRM practices applied to different groups of employees within each case company are compared using an employment systems model. The employment system is structured and multi-layered. The development of the structured employment system is then analysed in relation to the cultural and sectoral factors. It is shown that only the cultural characteristics of the Japanese parent companies can explain the ethnocentric management approach used in which Japanese personnel are employed in the internal labour marker (ILM) and local employees are employed outside the ILM. Economic and labour market conditions in both parent and host countries and sectoral characteristics have also contributed to the stratification of the employment system among the local employees. The implications of this study are that the long-term development of Japanese multinational retailers will be weakened if the structured employment system persists.     

Fractional integration in daily stock market indices at Jordan's Amman stock exchange

Using daily data on five sectoral indices from 2006 to 2014, this paper aims to investigate the possibility of fractional integration in sectoral returns (and their volatility measures) at Jordan's Amman stock exchange (ASE). Empirical analysis, using the log-periodogram (LP) and local whittle (LW) based semi-parametric fractional differencing techniques suggest that all sectoral returns at ASE exhibit short memory. However, in the case of volatility measures, we found evidence of long memory. Following the recent literature that argues that structural breaks in a time series could also explain the presence of long memory, we tested the volatility measures for the presence of structural breaks. We found that long memory in some volatility measures could be attributed to the presence of structural breaks. Furthermore, using impulse response functions (IRF) based on ARFIMA, we found that shocks to sectoral returns at ASE exhibit short run persistence, whereas shocks to volatility measures display long run persistence.     

Refining Stylized Facts from Factor Models of Inflation

Factor models of disaggregate inflation indices suggest that sectoral shocks generate the bulk of sectoral inflation variance, but no persistence. Aggregate shocks, by contrast, are the root of sectoral inflation persistence, but have negligible relative variance. We show that simple factor models do not cope well with essential features of price data. In particular, sectoral inflation series are subject to features such as measurement error, sales and item substitutions. In factor models, these blow up the variance of sector‐specific shocks, while reducing their persistence. We control for such effects by estimating a refined factor model and find that inflation variance is driven by both aggregate and sectoral shocks. Sectoral shocks, too, generate substantial inflation persistence. Both findings contrast with earlier evidence from factor models, but align well with recent micro evidence. Our results have implications for the foundations of price stickiness, and provide quantitative inputs for calibrating models with sectoral heterogeneity. Copyright © 2014 John Wiley & Sons, Ltd.     

Conceptualizing and measuring “industry resilience”: Composite indicators for postshock industrial policy decision-making

Can resilience be a relevant concept for industrial policy? Resilience is usually described as the ability of a socioeconomic system to recover from unexpected shocks. While this concept has caught the attention of regional economics researchers seeking to understand the different patterns behind regional recovery after a disruption, it is increasingly recognized that resilience can have policy-relevant conceptual applications in many other regards. In this paper, we apply it to industries and define the “industry resilience” concept and measurements. Our contribution is twofold. Theoretically, we frame industry resilience as a useful conceptual framework for policy-making to support the selection of industrial policy targets that are more capable of recovering after unexpected shocks. In addition, industry resilience can mitigate government failures by supporting decision-makers in promoting both economically and socially sustainable structural change. Methodologically, building on post-2008 U.S. data, we develop two composite indicators (CIs) to separately analyze quantitative and qualitative postshock variations in sectoral employment. Such CIs support policy-makers in visualizing sectoral performances dynamically and multidimensionally and can be used to compare each sector both to other sectors and to its counterfactual. Our results highlight that sectors react heterogeneously to shocks. This points to the relevance of tailoring vertical industrial policies according to sector features and the aims of industrial policy initiatives.     

The Structure of Sprawl: Identifying and Characterizing Employment Centers in Polycentric Metropolitan Areas

This paper applies a consistent framework to four comparably sized metropolitan areas to identify and characterize their employment centers. Employment centers are identified as places that exceed a threshold employment density and a threshold employment level. They are also characterized as specializing on the basis of location quotient analysis. We find clear evidence of specialization in every employment center in the four metropolitan areas studied. Our interpretation is that what we are observing is a systematic change in metropolitan structure rather than a random sprawling of firms. We also find some evidence that the size distribution of employment centers follows the rank-size rule. This suggests that there is structure not only in the distribution of economic activity among the employment centers but also in their size distribution. Because less than 50 percent of metropolitan employment is within employment centers, future research should focus on understanding the more diffuse employment patterns. The rank-size rule gives some guidance as to the expected size distribution of employment throughout the metropolitan area.     

R&D and aggregate fluctuations

Empirical observations raise interesting questions regarding the sources of the excessive volatility in the R&D sector as well as the nature of the relation between the sector and aggregate fluctuations. Using US data for the period 1959–2007, we identify sectoral technology and capital investment-specific shocks by employing a Vector Autoregression. The identifying assumptions are motivated by a two-sector dynamic general equilibrium model. Controlling for real and nominal factors, we find that capital investment-specific shocks explain 70 percent of fluctuations of R&D investment, while R&D technology shocks explain 30 percent of the variation of aggregate output, net of R&D investment. Technology shocks jointly explain almost all the variation of output in the R&D sector and 78 percent of the variation of output in the rest of the economy. They also constitute the main factor of the procyclicality of R&D investment.     

Local labor market impacts of energy boom-bust-boom in Western Canada

The impacts of energy price boom and bust are analyzed through the differential growth in employment and earnings between local labor markets with and without energy resources in Western Canada. The estimated differentials attributed to the boom-induced labor demand shocks show significant direct and indirect impacts on the earnings and employment within the energy extraction and other non-energy local sectors respectively. The local job multipliers indicate that job creation within the energy extraction sector leads to modest job creation within the non-energy local sectors during boom periods. For every ten energy extraction jobs created during a boom period, approximately three construction jobs, two retail jobs, and four and a half service jobs are created.     

Spillover effects on the sectoral returns for australian and New Zealand equity markets

In this paper, we examine the return and volatility spillovers, together with the trend spillovers on the sectoral equity returns for Australian and New Zealand markets. We find that the return spillovers of industrial, local and global shocks have a limited effect on Australian and New Zealand sector returns, whereas the volatility spillovers play a significant role on explaining the volatility of sector equity indices. Furthermore, we discover that the volatility spillover effects of the global and industrial shocks are greater in magnitude for explaining the volatility of the Australian sectors than those of New Zealand, particularly basic materials, oil and gas, technology and telecom sectors. By employing the trend spillover model, we find that the volatility spillover effects of global sector indices have been increasing over the volatility of the Australian sectoral returns until now. This finding proposes that Australian sector equity market is more integrated with the world than the New Zealand counterpart.     

Employment Growth in Italian Local Labour Systems: Issues of Model Specification and Sectoral Aggregation

Abstract

In this paper we construct a model to estimate local employment growth in Italian local labour markets for the period 1991–2001. The model is constructed in a similar manner to the original models of Glaeser et al. (1992), Henderson et al. (1995) and Combes (2000). Our objective is to identify the extent to which the results estimated by these types of models are themselves sensitive to the model specification. In order to do this we extend the basic models by successively incorporating new explanatory variables into the model framework. In addition, and for the first time, we also estimate these same models at two different levels of sectoral aggregation, for the same spatial structure. Our results indicate that these models are highly sensitive to sectoral aggregation and classification and our results therefore strongly support the use of highly disaggregated data.     

The effects of dollar appreciation on sectoral labor market adjustments: Theory and evidence

We examine the extent to which exchange rate fluctuations affect sectoral employment and wages in the United States. We introduce a theoretical rational expectation model that decomposes movements in the exchange rate into anticipated and unanticipated components. The model demonstrates the effects of demand and supply channels on the response of the nominal wage and labor employment to changes in the exchange rate. The evidence indicates that the deflationary effect dominates on industrial nominal wage in manufacturing and transportation industries in the face of dollar appreciation. More importantly, there is evidence of a decrease in employment growth in several industries in response to dollar appreciation, which is statistically significant in construction and at the aggregate level. This evidence is consistent with a decrease in labor demand given the loss of competitiveness of U.S. products following dollar appreciation. There are negative effects of dollar appreciation on labor market conditions in the United States. Nonetheless, dollar appreciation is consistent with an increase in employment growth in the mining sector where the share of imports is the largest among U.S. industries.     

Dismantled Spatial Fixes in the Aftermath of Recession: Capital Switching and Labour Underutilization in the Greek Capital Metropolitan Region

The article offers a fresh, empirically grounded look at the spatialities of crisis‐triggered employment forms—a largely overlooked issue in contemporary critical geography literature. Specifically, it discusses the interconnection between investment flows from manufacturing to the built environment (capital switching) and underemployment in urban metropolitan regions to substantiate its impact on emerging spatial fixities. The article, which is based on an empirical analysis informed by a radical political economy, investigates changing fixed capital formations in Greece over an extended period prior to and during the recession, from 1995 to 2012. It traces the evolution of part‐time waged work in the capital metropolitan region of Attica (Athens) vis‐à‐vis the rest of the country's regional labour markets, focusing on the polarized 2005–2012 period and the demise of the construction industry. The article highlights that ‘disrupted’ capital switching that occurred in Greece, closely associated with recalibrated sectoral priorities and institutional interventions, resulted in the uneven sprawling of underemployment. Our findings offer insight into how the dismantling of spatial fixes within core metropolitan regions of the southern European Union (and beyond) are connected to labour surplus and successive slumps in manufacturing and construction. The article closes by calling for new theorizations of contemporary urban regional unevenness and its spatiotemporal fixities, which account for the role of changes in labour turnover time.     

Factors driving sectoral and occupational employment changes during the Spanish boom (1995–2005)

Spain's economy grew at a real annual average rate of over 3.5% between 1995 and 2005. Total employment increased by more than five million. This process altered the sectoral and occupational structure of employment. The dynamics of final demand, technology and labour requirements linked to technology and labour market institutions mostly drive shifts in the structure of employment. We analyse their effects and relative weights on private employment growth in an input–output framework, by means of structural decomposition. The analysis of the occupational structure is a novelty. Sectoral and occupational structures of employment are receiving a great deal of attention: the productivity growth and economic prospects of service economies and the debate between skilling and polarization are, respectively, the main issues. This paper provides useful insights on the dynamics of the structure of employment during a process of vigorous job growth.     

Input–output linkages and the propagation of domestic productivity shocks: assessing alternative theories with stochastic simulation

Relatively small sectoral productivity shocks could lead to sizable macroeconomic variability. Whereas most contributions in the literature analyze the issue of aggregate sensitivity using simple general equilibrium models, a novel approach is proposed in this paper, based on stochastic simulations with a global computable general equilibrium model. We find that the variability of the GDP, induced by sectoral shocks, is basically determined by the degree of industrial concentration as measured by the Herfindahl index of industrial value added. The degree of centrality in inter-industrial connectivity, measured by the standard deviation of second-order degrees, is mildly significant, but it is also correlated with the industrial concentration index. After controlling for the correlation effect, we find that connectivity turns out to be statistically significant, although less so than granularity.