This dissertation consists of three chapters. The first two consider the dynamic adjustment of local labor markets to labor demand shocks in the presence of imperfect capital and labor mobility across locations. I explore how imperfect mobility affects how rapidly local areas recover from shocks to labor demand, such as those associated with changes in demand for local products and changes in foreign competition. In the first chapter, I employ a structural model of labor market adjustment to assess the strengths of capital and labor mobility in the response of employment and wages to labor demand shocks. I estimate this model, and compute the welfare impacts of certain policies. Results show higher levels of capital mobility and lower levels of labor mobility than the results of previous work suggest. This has a major effect on how policies affect the welfare of workers and firms. In the second chapter, I add spatial interactions to a simple model of local labor market adjustment, to determine the role that geography plays in the migration of capital and labor across local labor markets. This is done for both U.S. state and county labor market data. The purpose is to assess the value of modeling the role of distance in migration decisions. Results show that spatial interactions explain a significant portion of the responses of local labor markets to labor demand shocks, although failing to explicitly model these effects does not induce substantial bias in coefficient estimates. The third chapter considers the effect of students' exposure to diversity on their perceptions of racial justice, by exploiting a school choice lottery, to assess the impacts of desegregation efforts on racial justice perceptions. Results show that both Black and White students that are exposed to greater levels of diversity report more negative perceptions of racial justice towards their own races. This implies desegregation efforts worsen racial justice perceptions for some students.