School Brown Bag: Michael Poyker

Why aren't people leaving “Janesville”?: Industry persistence, trade shocks and mobility (with Sebastian Ottinger)

Abstract:  Particular industries have dominated many locations in the United States for more than a century. We show individuals residing in such locations were systematically less likely to move away from there during the last decades. Identifying locations with sizable employment shares in the same manufacturing industries in 1870 and 1980, we document less out-migration from there in the decades from 1960 on. In response to the largest shock affecting manufacturing employment since then, these locations adjusted differently: The 'China shock' lead to higher unemployment in there, but fewer people moved away. Drawing on rich data of social links across counties and surveys of individuals residing there, we document that they have stronger local friendship networks and exhibit systematic differences in their job market search behavior. We hypothesize that when local opportunities narrow, these locations' residents lack information about job opportunities elsewhere and benefit from the amenity value of extended social networks in their location of origin only. Instrumental variable results based on a historical shock to local industries' chances of survival suggest that the effect of dominant manufacturing industries on migration is causal.