2024/12/31 by David Card, Jesse Rothstein, Moises Yi · 1 voice
Economics, Econometrics and Finance · #Fiscal Policy and Economic Growth #Regional Economics and Spatial Analysis #Spatial and Panel Data Analysis
paper · doi:10.1257/app.20220427
openalex publication_date 2024/12/31 · openalex created_date 2025/10/10 · openalex updated_date 2026/06/11
We use linked employer–employee data to study the causal effects of location on earnings in the United States. We estimate a model with employer and employee effects, then aggregate to the commuting zone (CZ) level. Sorting across firms biases traditional “movers” designs. Our model accurately predicts earnings changes for CZ movers after accounting for firm sorting. Worker skills explain half of observed earnings differences across CZs; observable characteristics understate this. Industry composition explains little of average place effects. Costs at least offset CZ earnings premia on average; workers who move to higher-wage CZs have equal or lower real consumption. (JEL J24, J31, R23, R32)