Inter- and Intrasectoral Shocks: Effects on the Unemployment Rate
Journal of Labor Economics
1997
Intersectoral shocks require resource reallocation across sectors while intrasectoral shocks require resource reallocation within sectors. A crucial difference between these shocks is that the former require much higher adjustment costs than the latter. Using accounting data to calculate returns on capital in manufacturing industries, I generate proxies for these shocks. I find that the magnitude of intrasectoral shocks is much greater than that of intersectoral shocks but intersectoral shocks explain the aggregate unemployment rate better than intrasectoral shocks. I also find that intersectoral shocks are more closely related to the unemployment rate in the later part of the sample considered.
- DOI
- 10.1086/209837
- Volume
- 15 (2)
- Pages
- 376-401
- Language
- en
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- BibTeX
- Sources
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