Local Labor Market Tightness and Job Quality: Evidence from Job Changers

RePEc Short ID: phe422
ORCID iD: 0000-0002-2534-8164

Hershbein, Brad; Lim, Katherine; Webber, Douglas A.; Zabek, Mike

doi:10.17016/FEDS.2026.043

Working Paper

Local Labor Market Tightness and Job Quality: Evidence from Job Changers

Abstract: Using novel data from the Survey of Household Economics and Decisionmaking, we examine how labor market tightness affects workers’ job quality. We estimate that a 10 percent increase in job vacancies not only increases the probability of changing jobs, it yields an 11–18 percent increase in the (unconditional) probability of switching to a better job overall, and one with greater pay and benefits, interest in the work, and advancement opportunities. Because tight labor markets improve both worker pay and job amenities in roughly the same proportion, their benefits to workers are underestimated when based on pay alone.

JEL Classification: J23; J28; J32; J62;

https://doi.org/10.17016/FEDS.2026.043