Local Labor Market Tightness and Job Quality: Evidence from Job Changers

• In Event: Beyond Wages: Job Amenities and Worker Bargaining Power

Abstract

Using novel data from the Survey of Household Economics and Decisionmaking (SHED) on self-assessed changes in job amenities among individuals who changed jobs between 2020 and 2024, we estimate the effect of labor market tightness on changes in multiple dimensions of job quality. We find evidence that higher levels of job vacancies per person, as measured at the state level by the Job Openings and Labor Turnover Survey (JOLTS), led to a greater likelihood that workers changed jobs and saw improvements in pay and benefits, interest in the work, better opportunities for advancement, and overall job quality in their new jobs. Specifically, preliminary results show that a 10 percent increase in vacancies per capita is associated with a 12 percent increase in the likelihood of changing jobs and a 17.5 percent increase in the likelihood of moving to an overall better job. Increases in work-life balance and reduced physical demands of the job show a positive but weaker relationship. Our results are robust to multiple measures of labor market tightness across data sources (including Lightcast job postings) and geographic definitions of the labor market (including CBSAs). Our results suggest that labor market tightness not only improves worker pay, in line with earlier studies, but also several job amenities more broadly, and these effects vary across different groups of workers. Consequently, the benefits to workers of a tight labor market may be underestimated based on pay alone, with implications for distributional consequences.

Author

• Brad Hershbein, W. E. Upjohn Institute for Employment Research
  Presenting Author