on an earlier draft and to the Leverhulme Programme on The Labor Market Consequences of Technical and Structural It is widely believed that regional labor markets in the USA are highly flexible, so that employment shocks have only transitory effects on joblessness since induced migration quickly offsets much of the initial impact. However, time-series analysis of the response to shocks is very sensitive to errors of measurement, and such errors are large in some widely used labor market series which depend on household surveys of limited size. Adjusting for the likelihood magnitude of these errors with some novel statistical approaches, and using a range of data sources, we show that the responsiveness of employment rates to state specific shocks has been rather weak in the USA over the past 30 years, although probably stronger in the 1950s and 1960s. This suggests that flexible regional adjustment is not a major factor behind the contemporary success of monetary union in the USA
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