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Okun’s law and urban spillovers in US unemployment

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  • Casto Montero Kuscevic

Abstract

Using data for 2002–2010 from 358 Metropolitan Statistical Areas (MSA), we estimate Okun’s law which accounts for national shocks and spatial spillovers in urban areas. Our scale of measurement is changed to the state level, allowing us to capture a different source of spatial dependence on unemployment. Our main finding is that MSA-specific growth has a small effect on MSA unemployment rate, implying that in a well-integrated labor market like the USA, unemployment at an urban level is highly dependent on neighboring and national labor market conditions. Our results also show that the driving forces behind the behavior of unemployment for MSAs are different than those for states. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Casto Montero Kuscevic, 2014. "Okun’s law and urban spillovers in US unemployment," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(3), pages 719-730, November.
    • Handle: RePEc:spr:anresc:v:53:y:2014:i:3:p:719-730
    DOI: 10.1007/s00168-014-0640-2
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    More about this item

    Keywords

    C31; E23; E24; J61;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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