Spatial mismatch and youth unemployment in US cities: public transportation as a labor market institution

Spatial mismatch between homes and jobs within a city can create unemployment despite the presence of unfilled jobs. This is especially problematic among young people who have limited transportation options and high rates of joblessness. Car ownership is a possible solution to spatial mismatch, but private vehicles are expensive and involve negative externalities. Public transportation provides an alternative infrastructure that reduces structural unemployment by matching supply and demand. Using longitudinal models of public transportation in the 95 largest US cities between 2000 and 2010, we test whether better public transit services reduce youth unemployment. Public transportation systems can serve as a labor market institution, but there are two worlds of public transportation in American cities. Improvements in public transit are mostly beneficial in cities that are already less dependent on private automobiles. Path dependence in transportation design means that some cities see little benefits to incremental investments in public transit.

International Outsourcing and Wage Rigidity

In industrialized economies, International Outsourcing is often blamed for destroying jobs and thus, inducing unemployment. Since most contributions examining International Outsourcing assume flexible wages, they do not address these concerns directly. This paper adopts a rigid wage approach and investigates the differences occurring. As theoretical results and the empirical panel data estimations for Germany show, effects depend on industry aggregation, the industry's skill intensity, and the labor market institution. Only in industries characterized by wage rigidity, outsourcing significantly increases low skilled unemployment. Consequently, not International Outsourcing but inflexible labor market institutions instead should be blamed for destroying low skill jobs.

Occupational Licensing

The study of the regulation of occupations has a long and distinguished tradition in economics. In this paper, I present the central arguments and unresolved issues involving the costs and benefits of occupational licensing. The main benefits that are suggested for occupational licensing involve improving quality for those persons receiving the service. In contrast, the costs attributed to this labor market institution are that it restricts the supply of labor to the occupation and thereby drives up the price of labor as well as of services rendered. Alternative public policies for this institution are identified.