Working Paper: NBER ID: w25709
Authors: David Albouy; Alex Chernoff; Chandler Lutz; Casey Warman
Abstract: We examine local labor markets in the U.S. and Canada from 1990 to 2011 using comparable household and business data. Wage levels and inequality rise with city population in both countries, albeit less in Canada. Neither country saw wage levels converge despite contrasting migration patterns from/to high-wage areas. Local labor demand shifts raise nominal wages similarly, although in Canada they attract immigrant and highly-skilled workers more, while raising housing costs less. Chinese import competition had a weaker negative impact on manufacturing employment in Canada. These results are consistent with Canada's more redistributive transfer system and larger, more-educated immigrant workforce.
Keywords: local labor markets; Canada; United States; wage levels; inequality; immigration
JEL Codes: J21; J31; J61; N32; R12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| local labor demand shifts (J23) | nominal wages (J31) |
| local labor demand shifts (J23) | employment (J68) |
| local labor demand shifts (J23) | real wages in Canada (N12) |
| Chinese import competition (F14) | manufacturing employment in Canada (N62) |
| local labor market demand shocks (J69) | responsiveness of university graduates and immigrants in Canada (J68) |