Felsenstein, Daniel Persky, Joseph Carlson, Virginia
Year of Publication:
42nd Congress of the European Regional Science Association: "From Industry to Advanced Services - Perspectives of European Metropolitan Regions", August 27th - 31st, 2002, Dortmund, Germany
Metropolitan Labor markets are characterized by gross flows, much larger than the traditional net measures of employment change might suggest. Standard impact analyses of employment change tend to either ignore these flows or treat them as a matter of 'job churning'. But in a metropolitan area experiencing involuntary unemployment and underemployment, these flows may offer real opportunities for individuals to improve their employment positions. Such improvement occurs along 'job chains' in which a new vacancy opens a sequence of job changes allowing workers to move closer to their full employment wage. Not all chains are of the same length, nor does every chain produce the same welfare gain. This paper presents a model of job chaims which addresses chain length, welfare gains and distributional effects. The application of the model is illustrated using a hypothetical case of a new manufacturing firm in the Chicago metropolitan area. The job chains approach to estimating multiplier, efficiency and distributional effects associated with the firm, is compared with conventional impact analysis estimates. The conclusions discuss the implications of these estimates for the evaluation of local economic development projects.