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Publication Date



Upjohn Institute working paper ; 20-325

**Published Version**

American Economic Journal: Applied Economics




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


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


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


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Hershbein, Brad J. and Bryan A. Stuart. 2023. "The Evolution of Local Labor Markets After Recessions." Upjohn Institute Working Paper 20-325. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research. https://doi.org/10.17848/wp20-325