Journal of Political Economy Vol. 127 No. 5 2019
Employment Hysteresis from the Great Recession
Abstract
This paper uses US local areas as a laboratory to test for long-term impacts of the Great Recession. In administrative longitudinal data, I estimate that exposure to a 1 percentage point larger 2007–9 local unemployment shock reduced 2015 working-age employment rates by over 0.3 percentage points. Rescaled, this long-term recession impact accounts for over half of the 2007–15 US age-adjusted employment decline. Impacts were larger among older and lower-earning individuals and typically involved a layoff but are present even in a mass-layoffs sample. Disability insurance and out-migration yielded little income replacement. These findings reveal that the Great Recession imposed employment and income losses even after unemployment rates signaled recovery.
- DOI
- 10.1086/701809
- Volume
- 127
- Issue
- 5
- Pages
- 2505-2558
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref