Business dynamism, educational attainment, and residential location choice

Using individual-level, geocode data from the National Longitudinal Survey of Youth's 1997 cohort, I ask whether business dynamism in local labor markets, defined as the rates of job creation and establishment entry, affects the location decisions of labor force participants, and I examine how effects differ for highly and less educated labor force participants. I find that a one standard deviation increase in business dynamism is associated with a 2%-4% increase in the probability a college graduate chooses a metropolitan statistical area and an 8%-15% decrease for high school graduates with no college experience. These results support recent findings documenting a decrease in responsiveness to local labor market conditions and suggest that incentivizing job creation in local labor markets may not be enough to offset the trend of declining internal migration in the United States.

Automated summary

Using geocode data from the National Longitudinal Survey of Youth, this study examines the impact of business dynamism on location decisions of labor force participants and explores how this impact differs between highly and less educated individuals. The findings reveal that increased business dynamism leads to a higher likelihood of college graduates choosing metropolitan areas, while it decreases the probability for high school graduates without college experience. These results highlight the declining responsiveness to local labor market conditions and suggest that promoting job creation alone may not be sufficient to counteract the trend of decreasing internal migration in the United States.