Job flows and labor dynamics in the U.S. Rust Belt

Differences in growth, wages, and unemployment across metropolitan areas are well documented in the urban and regional economics literature.1 Researchers, however, know little about the underlying labor dynamics and establishment characteristics related to such differences. With establishment microdata, linked across time, one can analyze employment growth in terms of the number of jobs created and the number of jobs destroyed. One can also look at how various establishment characteristics (for instance, age, size, and wages paid) relate to growth and unemployment. Many of these analyses have been done at the national level,2 but research on the regional aspects of these statistics is sparse, and as a result, economists know little of how the microdata-based statistics behave in local labor markets.3 This article documents that behavior so that both researchers and policymakers can better understand how local labor markets function. The Rust Belt region of the United States, comprising mostly States in the Upper Midwest and Mid-Atlantic portions of the country,4 gets its name from the large concentration of manufacturing activity located there. When manufacturing began a steep decline that lasted throughout the 1970s and 1980s, many of the region's local economies followed suit. Consequently, employment growth in the Rust Belt lagged national growth over the period. It was not until the latter part of the 1980s that the rates of employment growth in the Rust Belt came close to those for R. Jason Faberman From 1992 to 2000, high employment and wage growth occurred together with low unemployment in a number of U.S. Rust Belt metropolitan areas; localities with these characteristics had larger and younger establishments, on average, in environments with high rates of both job creation and job destruction Job flows and labor dynamics in the U.S. Rust Belt