Upjohn Author ORCID Identifier

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

Publication Date

5-4-2020

Series

Upjohn Institute working paper ; 20-325

DOI

10.17848/wp20-325

Abstract

This paper studies the effects of recessions on U.S. local labor markets. Using variation in sudden employment losses during each recession between 1973 and 2009, we find that areas more affected by recessions experience highly persistent declines in employment and population. Most importantly, and contrary to prior work, every recession we study generates local labor market hysteresis in the form of persistent decreases in the employment-population ratio and earnings per capita. Our results imply that recessions induce persistent reallocation of employment across space, and that limited population responses result in longer-lasting disruptions to local labor markets than previously thought.

Issue Date

April 2020, Revised August 2021

Note

Upjohn project #35305

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

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Citation

Hershbein, Brad J. and Bryan A. Stuart. 2021. "Recessions and Local Labor Market Hysteresis." Upjohn Institute Working Paper 20-325. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research. https://doi.org/10.17848/wp20-325