Spillover Propserity: The Forward Linkages of High-Skill Employment

• In Event: Inequality, Poverty, and Mobility Section Roundtables
  In Refereed Roundtable (60 minute): 19. Labor Market II

Abstract

This chapter is drawn from my dissertation, which explores the geography of labor market attachment in the United States in the twenty-first century. Drawing from the work of William Julius Wilson, Richard Florida, Enrico Morretti and David Autor, I seek to identify the institutional mechanisms that have translated the experience of routine-biased technical change (RBTC) into a growing epidemic of chronic joblessness among select parts of the American workforce. Specifically, I draw attention to a shift in the American political economy from a rent-sharing model premised on predistribution to one that relies to a greater extent on the spillover effects of employment in the so-called “knowledge economy.” Mobilizing a dataset of online job postings prepared by the private labor-analytics firm Lightcast, I compare the characteristics of labor market demand across six clusters of MSAs in each calendar month starting from the end of the Great Recession until the onset of the COVID-19 pandemic. I find that hollowed-out metros that oversee recoveries in employment rates differ from those that do not principally in the kinds of high-skill jobs that fill the void left by the disappearance of middle-skill ones. Using bootstrapping methods, I devise a “multiplier” variable through which different categories of high-skill job postings are expected to accompany the creation of low-skill job postings, postings that could in theory be filled by those entering the workforce without advanced credentials or those displaced by RBTC. Whereas the role of the tradeable sector was once filled primarily by manufacturing and its associated industries in the United States (like in the rest of the developed world), I find that the knowledge economy’s counterpart is high-end business services that almost exclusively hire college-educated workers. Critically, this category encompasses only a minority of the non-routine-task-laden jobs that have increased the overall share of high-skill employment in the United States, meaning that the spillover model for rent-sharing is relatively narrow in scope. I conclude the chapter by recommending policies that move us beyond it.

Author

• Virgilio Urbina Lazardi, New York University