Employment Growth and the Allocation of New Jobs: Evidence from the South

A county-level labor market model is estimated for the 13 southern states. The model accounts for inter-county commuting, migration, and within-county adjustments to labor demand shocks. Econometric results indicate that most employment growth during the 1990s was accommodated by changes in commuting flows. The results also suggest that labor force growth and, by extension, population growth and associated fiscal impacts are sensitive to employment growth in nearby counties. These results highlight two opposing forces related to spatial spillovers that are usually neglected in analyses of the economic and fiscal impacts of employment growth.