An Econometric Model of Employment Growth in US Metropolitan Areas

Abstract

This paper reports on tests of hypotheses about the determinants of employment growth in US metropolitan areas. All urban employment covered by Social Security is included; the hypotheses are tested for each of forty groups of four-digit SIC industries. The units of observation are 284 areas, including all SMS As, as of 1970, plus some smaller places. The period is 1965–1970. The two main findings are: First, ease of attracting labor is not shown to have an important influence on local employment growth. Second, access to markets is the most important factor, followed by localization economies, and—for some industrial groups—low wage rates and access to inputs; urbanization economies (measured by city size) are a negative factor for some groups. The research is part of a larger study of the determinants of migration and employment growth.