Differentiating employment prospects by industry and returns to job search in metropolitan areas

The role of differentiating employment prospects by the industry of the employer in the job seeker's calculation of the returns to search is analyzed. It is demonstrated that returns to search can vary systematically between metropolitan areas because of differing mixes of industry employment; it is argued that an increase in a measure of dispersion in the industry mix will tend to raise returns to job search. To test this hypothesis, cross sections of census data on unemployment rates of male experienced workers in each of the seven major occupational groups were analyzed. Statistically significant regression equations were obtained for three occupational groups (craftsmen, nonfarm laborers, and operatives); in all these cases the results supported the hypothesis of the paper.