Recessions and Local Labor Markets: New Evidence on the Evolution of Economic Activity
09/01/2018 - 08/31/2019
This project will provide new evidence on the short- and long-run effects of recessions on local economic activity. Drawing upon newly compiled public-use data from multiple sources, we will study how earnings, employment, government transfers, and population evolve across local areas (counties, metropolitan areas, and commuting zones) that were differentially affected by national recessions. We proxy variation in recession severity with multiple measures, including the proportional decline in earnings per-capita as well as a shiftshare employment instrument based on industrial mix. Using an event-study framework that allows us to control for local area and time period fixed effects, as well as a host of other possible time-varying confounders, we will study every NBER-dated U.S. recession since 1973, examining both the pre-recession and post-recession evolution of economic activity through 2016.
The study ties together earlier research on the long-term effects of labor demand shocks on local areas (but did not focus specifically on recessions), the scarring effects from recessions on individual labor market outcomes, and the decreases in geographic and labor mobility that have accompanied jobless recoveries. The findings will have implications for targeting of employment services and training as well as better understanding of persistent unemployment.
Avar Consulting, Inc. (on behalf of DOL)
LABOR MARKET ISSUES; ECONOMIC DEVELOPMENT; UNEMPLOYMENT, DISABILITY, and INCOME SUPPORT PROGRAMS