Uncertainty and the Geography of the Great Recession
Daniel Shoag and
Stan Veuger
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Daniel Shoag: Harvard University
Working Paper Series from Harvard University, John F. Kennedy School of Government
Abstract:
We document the link between increased levels of economic and policy uncertainty and unemployment at the state-level during the 2007-2009 recession. The cross sectional variation in uncertainty robustly matches the distribution of employment outcomes during this period. When we instrument for this cross sectional variation using preexisting institutions, we find evidence for a causal role for uncertainty in increasing unemployment. A simple model of hiring and firing under uncertainty rationalizes these results, and the within-state distribution of effects across industries, occupations, and individuals is consistent with this model's predictions. Together, these results suggest that increased uncertainty contributed to the severity of the Great Recession.
Date: 2015-03
New Economics Papers: this item is included in nep-mac and nep-ure
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Citations: View citations in EconPapers (16)
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https://research.hks.harvard.edu/publications/getFile.aspx?Id=1173
Related works:
Journal Article: Uncertainty and the geography of the great recession (2016) 
Working Paper: Uncertainty and the geography of the Great Recession (2013) 
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:harjfk:rwp15-014
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