Housing booms, manufacturing decline and labour market outcomes

Kerwin Kofi Charles, Erik Hurst, Matthew J. Notowidigdo*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

16 Scopus citations


We study how manufacturing decline and local housing booms contributed to changes in labour market outcomes during the 2000s, focusing on the distributional consequences across geographical areas and demographic groups. Using a local labour markets design, we estimate that manufacturing decline significantly reduced employment between 2000 and 2006, while local housing booms increased employment. These results suggest that housing booms ‘masked’ employment declines that would have occurred earlier in the absence of the booms. This ‘masking’ occurred both within and between cities and demographic groups. We find that roughly 40% of the reduction in employment during the 2000s can be attributed to manufacturing decline and that these negative effects would have appeared earlier had it not been for the large, temporary increases in housing demand.

Original languageEnglish (US)
Pages (from-to)209-248
Number of pages40
JournalEconomic Journal
Issue number617
StatePublished - 2019

ASJC Scopus subject areas

  • Economics and Econometrics


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