The Evolution of Local Labor Markets After Recessions

Authors

Brad J. Hershbein, W.E. Upjohn Institute for Employment ResearchFollow
Bryan A. Stuart, Federal Reserve Bank of PhiladelphiaFollow

Upjohn Author ORCID Identifier

https://orcid.org/0000-0002-2534-8164

Publication Date

5-4-2020

Series

Upjohn Institute working paper ; 20-325

**Published Version**

American Economic Journal: Applied Economics 16(3): 399-435

DOI

10.17848/wp20-325

Abstract

This paper studies how U.S. local labor markets respond to employment losses that occur during recessions. Following recessions from 1973 through 2009, we find that areas that lose more jobs during the recession experience persistent relative declines in employment and population. Most importantly, these local labor markets also experience persistent decreases in the employment-population ratio, earnings per capita, and earnings per worker. Our results imply that limited population responses result in longer-lasting consequences for local labor markets than previously thought, and that recessions are followed by persistent reallocation of employment across space.

Issue Date

April 2020, Revised August 2021, Revised January 2023

Note

Upjohn project #35305
Previously issued under the title Recessions and Local Labor Market Hysteresis

Sponsorship

We gratefully acknowledge funding from the 2018–2019 DOL Scholars Program (Contract # DOL-OPS-15-C-0060).

Subject Areas

LABOR MARKET ISSUES; Job security and unemployment dynamics; Wages, health insurance and other benefits; Local labor markets