Sources of sectoral employment fluctuations in central cities and suburbs: Evidence from four eastern US cities

We develop a structural vector autoregression for a model of suburban and central city sectoral employment. Orthogonalized shocks attributable to national, sectoral, suburban, central city, and local sectoral sources can be identified and used to delineate the sources of fluctuations in sectoral movements in the two parts of the metropolitan area. We apply the model to four Metropolitan Statistical Areas and find that in the short run there is very little in the way of feedback between central city and suburban employment; local shocks matter most of all. In the long run there are a substantial number of city industries where demand and/or supply shocks have spillover effects across the border of central city and suburb. (C) 2000 Academic Press.