Danny Yagan, University of California, Berkeley and NBER

Which Americans Have Jobs? The Enduring Impact of Great Recession Location

Over the Great Recession, the employment rate in some U.S. cities declined by more than twice the aggregate decline. To what extent did the ability to migrate insure workers against these idiosyncratic local shocks? Yagan answers this question using geo-coded administrative panel data on the universe of U.S. males from years 2000-2011. He finds that despite migration flows that were in principle large enough to provide full insurance, migration has provided only 7% insurance: the 2006 residents of the average local area have borne 93% of the area's idiosyncratic Great Recession labor demand shock. He finds similarly small degrees of insurance across specifications, demographic groups, and labor market outcomes. Insurance was three times greater over the 2001 recession, driven entirely by greater insurance for above-average earners. The relative failure of migratory insurance over the Great Recession is attributable to unusually small employment gains for those migrating from heavily-shocked areas to lightly-shocked areas, rather than to a decline in migration rates. The results imply large spatial adjustment frictions in the U.S. labor market and indicate that past location may be a powerful tag for directing social insurance.