How Does the Local Labor Market Affect Job Outcomes of the Working Poor? Earnings, Job Stability and Upward Mobility
By Elizabeth E. Davis and Bruce Weber
ABSTRACT
Some implicit assumptions underlie welfare reform efforts: namely that those on public assistance will be able to get jobs, that these jobs will be stable, and that they will lead to earnings levels that move the families out of poverty. Using a linked administrative database (the Oregon Employment Department's Shared Information System), we analyze econometrically the impact of labor market conditions (unemployment and job growth) on earnings, job stability (fraction of quarters worked during 1994-96) and upward mobility (fraction of quarters in which earnings exceeded the poverty line for a family of 3) of working poor adults in Oregon, controlling for the personal characteristics of the workers. We find that stronger labor market conditions are associated with increases in earnings, job stability and upward mobility, and that these effects are larger in urban labor markets than rural ones. We also investigate the overall stability of employment for a large sample of poor adults in Oregon, defined as the number of moves between jobs and between employment and unemployment over a two-year period. For many of these workers, total earnings are low because of frequent job changes and periods of unemployment. We use multi-county commuting zones to define labor markets.
KEYWORDS: Local labor market, employment, working poor, job instability, earnings.
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