Essays on labor and regional economics

This dissertation consists of three chapters that study topics on labor and migration economics. In Chapter 1, I examine the substitutability between prime age (25-54 years old) and marginal retirement age (55-64 years old) workers by investigating the impact of the internal migration of prime age workers across 320 U.S. Metropolitan Statistical Areas from 2002 to 2019. A 1% increase in the inflow of prime age workers boosts the relative employment of prime to marginal retirement age workers by 1.39%. The inflow shock reduces relative earnings by 0.18%, indicating a substitution elasticity of 7.7. Interpreted via an overlapping generations model, the inflow of prime age workers, coupled with low substitutability, enhances the welfare of workers nearing retirement. Therefore, I emphasize that policymakers should consider not only relocating people to high-inflow areas but also reducing worker substitutability to improve the welfare of the marginal retirement age population. Chapter 2 examines how local housing price shocks, credit supply shocks, and labor demand shocks affect young firm activities. In response to the first two shocks, young businesses become more active, whereas labor demand shocks negatively impact young firms. Interestingly, a higher share of workers in the construction industry amplifies the positive impact of labor demand shocks on young enterprises because, in this sector, the marginal product of labor in younger firms—expressed by the income growth rate—is higher than that in mature firms. Additionally, labor demand shocks have a significantly higher impact on young firms during recessions. The asymmetric response to labor demand shocks stems from differences in credit-fueled employment, suggesting that negative shocks during a recession have an additional adverse impact on younger firms. These findings suggest that policymakers should pay close attention to young and small firms when designing policies. Without adequate policy support or preparation for these shocks, the roles of young firms diminish after each recession, ultimately weakening business dynamism through repeated business cycles. In Chapter 3, Geoffrey Hewings and I investigate the trade-off between income inequality and regional economic output caused by negative net migration. As the inflow of high-educated workers increases or the inflow of low-educated workers decreases, the relative wages of high-educated workers decrease. Although the impact of workers' outflow on wage differentials remains ambiguous, further analysis suggests that the income inequality level in Illinois has declined due to a net outflow of highly educated workers. Simultaneously, the general net outflow of workers has a negative impact on the local economy, particularly through additional reductions in output and income from multiplier effects.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Economics

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2024

Author dc:creator

• Jung, Youngwook

Contributors dc:contributor

• Howard, Greg
• Bartik, Alexander
• Hewings, Geoffrey
• Parente, Stephen

• Elasticity Of Substitution
• Internal Migration

Statement dc:rights

• Copyright 2024 Youngwook Jung

Language dc:language

en, eng

Handle dc:identifier

https://hdl.handle.net/2142/124531

OAI record oai:identifier

https://www.ideals.illinois.edu/oai-pmh?verb=GetRecord&metadataPrefix=etdms&identifier=oai%3Awww.ideals.illinois.edu%3A2142%2F124531